(Reuters) – Investors turned bearish on the Thai baht for the first time in two months, highlighting concerns over the pace of recovery in Southeast Asia’s second-largest economy through the COVID-19 pandemic and a domestic political crisis.

FILE PHOTO: A Thailand Baht note is seen in this illustration photo June 1, 2017. REUTERS/Thomas White/Illustration

Bullish bets on most other emerging Asian currencies were scaled back with the U.S. dollar near two-month highs in recent weeks amid uncertainty leading up to the U.S. Presidential election, while market participants further increased short positions on the Indonesian rupiah IDR=.

Short positions on the baht THB=TH were at their highest since late-April, a fortnightly poll of 12 respondents showed, as the government tries to revive the tourism-reliant economy by approving long-stay visas for foreign tourists, providing tax incentives and cash handouts.

Last month, the Thai central bank left interest rates unchanged and upgraded its gross domestic product outlook, but more than two months of protests demanding amendments to the constitution continue to dent investor sentiment.

Prakash Sakpal, senior economist, Asia at Dutch bank ING, said in a note that rising political risk and anti-government protests underpinned his view that the baht, already down more than 5% in 2020, would continue to underperform its Asian peers this year.

Long bets on the Chinese yuan CNY=CFXS were trimmed considerably, while those on the Malaysian ringgit MYR=, the Philippine peso PHP= and the Indian rupee INR= fell for the second time in a month.

Investors also doubled down on their bearish positions against the rupiah IDR= amid mounting deaths from the coronavirus in Indonesia and persistent worries over policy mix and growth.

Doubts about the central bank’s autonomy after proposals to expand its mandate at a time when it is already financing huge sums of government debt have kept investors on edge, despite attempts by officials to reiterate Bank Indonesia’s independence.

By contrast, Taiwan’s dollar TWD=TP saw long bets rise to their highest since January. The currency has been among the region’s best performers this year as the tech-focussed economy benefits from increased stay-at-home working.

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 Shashwat Awasthi in Bengaluru, Editing by Sherry Jacob-Phillips

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