Bearish bets on China’s yuan climbed to their highest level since mid-May, according to a Reuters poll released Thursday. Analysts turned short on the currency for the first time this year as concerns over China’s weakening economy mounted.
China’s latest data highlighted the slowdown. Retail sales rose just 3.7% in July, well below the expected 5.9%. Industrial output grew only 5.7%, the slowest pace since November 2024. New home prices dropped 2.8% year-on-year, extending a two-year stagnation. Meanwhile, fixed-asset investment increased just 1.6% in the first seven months of 2025, missing forecasts of 2.7%.
Sentiment toward other Asian currencies also shifted. Analysts kept a bearish view on the South Korean won, while trimming short positions in the Singapore dollar. The Indonesian rupiah flipped from bullish to bearish, and short bets on the Taiwan dollar were slightly reduced.
Before Bank Indonesia’s surprise 25-basis-point rate cut on Wednesday, analysts had already begun to reassess their rupiah outlook. For the Indian rupee and Malaysian ringgit, bullish positions were pared back, while the Philippine peso and Thai baht also saw position adjustments.
ANZ analysts warned that India’s growth momentum may slow, citing weak household consumption and investment. U.S. tariffs are also hurting India’s export competitiveness. As a result, the rupee is expected to trade with a depreciation bias in the near-to-medium term, underperforming regional peers.
Meanwhile, China is exploring yuan-backed stablecoins to expand adoption and cross-border trade. Discussions are expected at the Shanghai Cooperation Organisation Summit in Tianjin on Aug. 31–Sep. 1.
Broader macro conditions also weighed on sentiment. Federal Reserve policy remains uncertain ahead of Chair Jerome Powell’s speech at Jackson Hole. Analysts said potential Fed reluctance to cut rates aggressively could strengthen the U.S. dollar and push Treasury yields higher, creating headwinds for emerging markets.
Money markets are pricing in a 93% chance of a September Fed rate cut, but the U.S. dollar index has edged 0.4% higher this week despite a recent two-week slide. Analysts at Maybank added that currencies such as the South Korean won (KRW) and Taiwan dollar (TWD), which gained strongly in the first half of 2025, may be most at risk for a pullback.
The Reuters poll covers positions in nine Asian emerging currencies: the Chinese yuan, South Korean won, Singapore dollar, Indonesian rupiah, Taiwan dollar, Indian rupee, Philippine peso, Malaysian ringgit, and Thai baht. It uses a scale from -3 (strongly short) to +3 (strongly long) versus the U.S. dollar.
