SENSEX NIFTY
Aug 29, 2013, 02.57 PM IST | Source: Reuters

Short rupee positions at five-year high: Poll

Bearish bets on the rupee increased to the highest since October 2008, according to a Reuters survey of 12 currency analysts published on Thursday.

Short rupee positions at five-year high: Poll

Short positions in the Indian rupee and some Southeast Asian currencies hit the largest levels since the global financial crisis in 2008 during the last two weeks as sentiment on regional currencies deteriorated, a Reuters poll showed.

Bearish bets on the rupee increased to the highest since October 2008, according to a Reuters survey of 12 currency analysts published on Thursday.

Sentiment on the Indonesian rupiah also became the most pessimistic since November 2008, the poll conducted on Wednesday and Thursday showed.

The rupee hit a record low on Wednesday on growing concerns that foreigners will keep dumping Indian stocks and bonds as the country faces stiff economic challenges and volatile global markets.

Also Read: Rupee can head to 70/$ if policy mishaps continue: CLSA

Despite a flurry of measures, policymakers have so far failed to slow the rupee's freefall, pushing the Indian economy into the tightest spot since a 1991 balance of payments crisis.

The rupee has weakened by more than 20 percent against the dollar since the beginning of May.

It recovered some ground on Thursday, however, after the Reserve Bank of India announced it would directly meet oil importing firms' dollar demands.

Raghuram Rajan, a widely acclaimed economist, is scheduled to take over as the new governor of the RBI on September 5.

The Indonesian rupiah touched a four-year low on stock outflows and dollar demand from local companies.

Despite their rebounds on Thursday, both currencies are seen as highly vulnerable to an anticipated reduction in the Federal Reserve's stimulus programme. Both India and Indonesia are struggling with growing current account deficits, slowing economic growth and strong resistance to implementing much-needed reforms.

Short positions in some Southeast Asian currencies hit their largest levels in five years as they suffered capital outflows due to deteriorating economic fundamentals.

Bearish bets on the Malaysian ringgit increased to the largest level since September 2008.

On Wednesday, the ringgit slid to its weakest in more than three years against the dollar on capital outflows amid worries about Malaysia's fiscal deficit. Foreign investors also sold the currency.

Pessimistic positions on the Philippine peso also rose to the highest since November 2008.

The poll also showed sentiment on the Thai baht became most bearish since February last year, when Reuters started including it in the survey. The baht on Wednesday hit a three-year low on capital outflows and importers' dollar demand.

Short positions in the Taiwan dollar reached the largest since late May.

Amid overall weakness in emerging Asian currencies, sentiment on the South Korean won turned bearish for the first time since early July.

By contrast, long positions in the Chinese yuan increased to their most since early June.

The yuan looked set for a second consecutive monthly gain in August as investors turn more optimistic towards the currency amid signs the economy is stabilising. The central bank also fixed the yuan's mid-point higher, helping the currency's appreciation.

The Reuters survey is focused on what analysts believe are the current market positions in nine Asian emerging market currencies: Chinese yuan, South Korean won, Singapore dollar, Indonesian rupiah, Taiwan dollar, Indian rupee, Philippine peso, Malaysian ringgit and the Thai baht.

The poll uses estimates of net long or short positions on a scale of minus 3 to plus 3.

A score of plus 3 indicates the market is significantly long U.S. dollars. The figures included positions held through non-deliverable forwards (NDFs).

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