Sentiment towards the rupee shifted, with investors sending it into bear territory

Sentiment towards most Asian currencies worsened in the past two weeks, a poll by news agency Reuters showed, as a bitter tariff war between the world's two biggest economies sent investors scurrying to safer assets, raised doubts about growth and rang recession alarms.

Investors switched to go short on the rupee, Indonesia's rupiah, Malaysia's ringgit and the Philippine peso, according to a poll of 13 respondents.

The poll was closed on Wednesday, before equities worldwide crumbled after an inverted US bond yield curve ramped up fears of a global recession.

Increase in bearish positions on China's yuan outpaced that of its peers, with short bets on the currency climbing to their highest since June.

Beijing's trade stand-off with Washington intensified over the past fortnight and was set to spill into the currency markets when the yuan slipped past 7 to the dollar after US President Trump announced additional tariffs on Chinese goods.

The currency later stabilised and Donald Trump has delayed some tariffs, offering small pockets of relief that have since been obliterated thanks to the recession warning and weak growth data out of China.

The world's No. 2 economy stumbled more sharply than expected in July and industrial output growth cooled to a more than 17-year low. Any downturn in China's economic fortunes ripples through many major Asian economies that count it as a key trade partner.

Hong Kong's pro-democracy protests have also featured in the US-China trade rhetoric, after Donald Trump tweeted on Wednesday about the trade deal and urged Beijing to seek a humane resolution to the city's months-long political crisis.

Sentiment towards the rupee shifted, with investors sending it into bear territory. India faces a deepening economic slowdown, which was most recently highlighted by easing July wholesale price inflation that indicated manufacturers are losing their power to raise prices.

Short bets were maintained on the Taiwan dollar. The country's exports unexpectedly dropped in July as Chinese demand fell, though shipments to the US rocketed to a record high.

Thailand's baht was the sole currency in the region to see bullish positions, though these bets unwound slightly.

Thailand's central bank last week joined counterparts in India and New Zealand to stun markets with a series of surprise interest rate cuts that signalled policymakers' dwindling ammunition to fight off an economic downturn.

The Reuters survey is focused on what analysts believe are the current market positions in nine Asian emerging market currencies: the rupee, the Chinese yuan, South Korean won, Singapore dollar, Indonesian rupiah, the Taiwan dollar, the Indian 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 on US dollars. The figures included positions held through non-deliverable forwards (NDFs).