By Anusha Ravindranath
(Reuters) - Investors have likely added to bets on further gains in emerging Asian currencies in the past two weeks as the dollar remained sluggish and most regional stock markets continued to rally, a Reuters poll showed on Thursday.
The dollar has come under renewed pressure in recent weeks from heightened political turmoil in the United States, a stronger euro and lingering doubts about whether the Federal Reserve will hike interest rates again in 2017.
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The dollar index which tracks the greenback against a basket of six major rivals, has fallen about 8.4 percent this year.
With the outlook for the dollar remaining soft, investors were estimated to have raised their long positions on most emerging Asian currencies, according to a poll of 11 analysts, traders and fund managers.
Bullish bets on the yuan ballooned to the largest in almost 3 years, with stronger central bank fixings, continued corporate dollar selling and a larger-than-expected increase in China's foreign exchange reserves fuelling a rally in the past few weeks.
The yuan has now strengthened 4 percent this year, helped by tougher policing of capital outflows and fresh steps by the central bank to flush out speculators who were betting the currency would continue to fall.
Traders raised bullish bets on the Indian rupee to their highest level since May 2014, the poll showed.
The rupee hit a more than two-year high last week amid heavy selling of dollars by foreign banks, and as the Reserve Bank of India's decision to cut interest rates posed little risk to the currency.
Exchange data showed Indian equities, attracted inflows for the sixth consecutive month in July on expectations of easier monetary policy.
The poll also showed market participants lifted their bullish bets on the Thai baht to the highest in over 3 years. The baht has appreciated more than its Southeast Asian peers this year.
The currency has been helped by the country's lower external risks and smaller foreign fund outflows, BOT Assistant Governor Jaturong Jantarangs had earlier said in March.
Investors reduced short positions on the Philippine peso over the last two weeks, while, bullishness on the Korean won diminished as political tension between U.S. and North Korea continued to escalate.
The Asian currency positioning poll is focused on what analysts and fund managers believe are the current market positions in nine Asian emerging market currencies: the 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 include positions held through non-deliverable forwards (NDFs).
(Reporting by Anusha Ravindranath in Bengaluru; Additional reporting by Chris Thomas; Editing by Kim Coghill)