Long positions on India's rupee were sharply raised to a three-year high, a Reuters poll found, as the central bank cut back on dollar-buying, while a weaker greenback and encouraging economic recovery signs propped up bullish bets on other Asian currencies. India's economy shrank 23.9% in the three months to June, much more than forecast, pointing to a longer than previously expected recovery, with analysts calling for further stimulus. Long bets on the Chinese yuan, South Korea's won, Singapore's dollar and the Malaysian ringgit were all raised to their highest since early 2018.
The Indian rupee rose to its highest level in nearly six months on Friday, gaining for a third straight session, with traders saying the central bank refrained from currency intervention as foreign investors piled into equity markets. The currency had been trading in a tight range until this week, as the Reserve Bank of India was seen regularly buying dollars via state-run banks to prevent a sharp appreciation in the rupee. The partially convertible rupee ended Friday at 73.3850 per dollar, up 0.6% on day.
The dollar edged lower in early European trade Friday, with volumes hit by the U.S. holiday and traders weighing the conflicting influences of positive economic data and the increasing number of coronavirus cases. Economic data released earlier Friday pointed to a brisk pickup in the Chinese service sector, with the Caixin Services Purchasing Managers Index coming in at 58.4 in June, the highest reading in two months. “Fed money printing has now secured what seems to be a stable negative correlation between risk assets and the dollar,” said analysts at ING, in a research note.