According to a poll taken every two weeks by 12 analysts, the number of short positions on all emerging Asian currencies went down. Bets on the Chinese yuan were at their lowest level since late April.
Short bets on the Philippine peso, the Singapore dollar, and the Indonesian rupiah also fell to their lowest levels in more than a month.
The fact that U.S. inflation stayed the same in July, which was the first big sign of relief after prices kept going up, also helped improve the mood in the region.
After the Bank of Thailand (BoT) raised its interest rate by 25 basis points on Wednesday, short bets on the Thai baht fell to their lowest level since early June. This started Thailand's tightening cycle, which had been behind that of other countries in the region.
Thailand's economy, which depends a lot on tourism, is slowly getting better as tourists come back. This lets the Bank of Thailand change its monetary policy.
Most analysts think that the BoT will continue to slowly normalize its policies for the rest of the year.
Since the beginning of this month, the baht has gone up by almost 4%, making it one of the least shorted currencies in the poll. It seems to be on the way to a recovery.
In the first seven months of the year, the value of the currency went down by 10.2%.
Most of the poll responses came in after the Thai central bank said that interest rates would be going up.
The Indonesian rupiah was also one of the least shorted currencies. This is because the country's economy is still on track to get better, but rising inflation and the possibility of a global recession have led to calls for Bank Indonesia (BI) to raise interest rates.
Indonesia, which has the largest economy in Southeast Asia, is one of the last countries in the region to keep its loose monetary policy from the time of the pandemic.
Citi and OCBC analysts think that BI will raise its benchmark seven-day reverse repurchase rate at a meeting later this month. Citi thinks that the rate will go up by 25 basis points.
But Maybank and ANZ do not think the central bank will move quickly to tighten.
Short bets on the Indian rupee, the South Korean won, and the Taiwan dollar fell to their lowest level since April 21.
The Asian currency positioning poll asks analysts and fund managers what they think the current market positions are for nine Asian emerging market currencies: the Chinese yuan, the South Korean won, the Singapore dollar, the Indonesian rupiah, the Taiwan dollar, the Indian rupee, the Philippine peso, the Malaysian ringgit, and the Thai baht.
In the poll, net long or short positions are estimated on a scale from -3 to +3. A score of +3 means that the market has a large amount of U.S. dollars.
The numbers include positions held through forwards that can't be delivered (NDFs)
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