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The recent Reuters polls reveal shifting investor sentiment across major Asian currencies amid ongoing geopolitical and economic uncertainties. Short positions on the Indian rupee are rising sharply due to looming heavy U.S. tariffs on Indian exports, while bullish bets on the Indonesian rupiah have reversed following political disruptions. Meanwhile, the Chinese yuan sees renewed optimism with long bets reaching a near two-month peak, driven by growing confidence ahead of trade negotiations with the U.S. This newsletter presents a detailed current outlook on these currencies, underpinned by the latest market data and expert forecasts as of September 2025, drawn from Reuters polling and analyst commentary.
Key Highlights:
Indian rupee short bets surge as U.S. tariff threats exacerbate depreciation fears.
Indonesian rupiah bullish momentum dissipates due to fiscal concerns and government instability.
Chinese yuan garners investor confidence amid positive trade negotiations outlook.
RBI actively intervenes to stabilize rupee amid capital outflows and tariff-induced pressure.
Market projections suggest near-term volatility and cautious positioning across Asian FX markets.
Indian Rupee: Rising Short Bets Amid Tariff Concerns
The Indian rupee (INR) has come under significant pressure after falling below the 88 per U.S. dollar mark recently. A Reuters poll of FX strategists shows short bets on the rupee reaching their highest level in over five years, reflecting market worries about the impact of U.S. tariffs on Indian goods. These tariffs stem from ongoing U.S.-India trade friction, including India's purchase of Russian oil, which drew threats of doubled tariffs by the U.S. administration.
The Reserve Bank of India (RBI) intervened by deploying part of its $690 billion reserves to sell dollars and curb the rupee's slide. Despite a surprisingly strong 7% GDP growth in the recent quarter, investors remain cautious, anticipating that the rupee could drift further toward levels near 90 per dollar if tariffs persist. Market forecasts from 38 analysts indicate median exchange rate expectations of 88.04 by the end of September and 87.75 by November, though some anticipate the rupee weakening further to near 90 within a year. The resumption of tariff threats and slower foreign capital inflows continue to weigh heavily on the rupee’s outlook.
Indonesian Rupiah: Bullish Bets Reversed Amid Political and Fiscal Turmoil
The Indonesian rupiah (IDR), which saw bullish investor sentiment earlier this year, has reversed course amid rising political uncertainties and fiscal concerns under the new government led by Prabowo Subianto. The Reuters poll highlights a reversal of previous bullish momentum as investor confidence erodes due to expansive social spending plans, budget cuts, and doubts about fiscal discipline.
The rupiah neared historic lows against the U.S. dollar, hovering around levels last seen during the 1998 Asian Financial Crisis. Bank Indonesia has intervened heavily to support the currency amid large foreign portfolio outflows exceeding $2 billion this year. Investors fret over the ambitious social welfare programs funding and the establishment of a new sovereign wealth fund with potential political interference. Market watchers expect continued rupiah vulnerability until firmer fiscal clarity and credible growth strategies are articulated.
Chinese Yuan: Investor Bulls Regain Confidence Amid Trade Talks
In contrast, the Chinese yuan (CNY) has seen a revival of bullish investor positions, with long bets on the currency hitting their highest level in nearly two months according to the Reuters poll. This positivity is driven by growing confidence in China’s economic recovery and anticipation of progress in U.S.-China trade negotiations slated for Stockholm, which have eased tariff-related uncertainties.
The People’s Bank of China (PBOC) has supported yuan strength by setting firmer midpoint rates while balancing domestic economic needs and external conditions. Chinese officials face challenges stabilizing the currency amid global tariff threats but recent diplomatic overtures and trade dialogue progress have buoyed market sentiment. Major investment banks forecast the yuan to stabilize around mid-7 per dollar levels through late 2025, marking a potential bottom after enduring significant depreciation during prior U.S. tariff escalations.
Outlook and Market Dynamics
The Indian rupee faces ongoing downward pressure from sustained U.S. tariffs, capital outflows, and trade tensions, leading to volatility despite RBI interventions.
Indonesia’s rupiah remains exposed to political risks and fiscal policy uncertainties, undermining previous bullish investor sentiment.
China’s yuan outlook brightens as trade dialogue advancements improve investor confidence, countering earlier tariff-induced depreciation.
Asian currencies' trajectories remain intertwined with U.S. economic policies, tariff developments, and regional political stability.
Source: Reuters
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