Asia-Pacific fund managers are increasingly switching out of the US dollar and into the euro and Asian currencies, particularly the Singapore dollar, according to the latest monthly Merrill Lynch Gallup survey. Of investors polled between July 30 and August 4 - who managed funds worth US$772 billion - just 5 per cent said the US dollar was their favourite currency over the next 12 months, compared with 35 per cent who chose it in the previous survey. In contrast, 32 per cent favoured the Singapore dollar, against 17 per cent previously, while the euro was the most popular currency, with 37 per cent of investors choosing it as their favourite unit. Merrill global strategist Trevor Greetham said Asian currencies were favoured in response to improved prospects for the region. 'You have got the Asian economies clearly recovering and so the currencies are recovering,' he said. This confidence had also spilt over into sentiment on the Chinese yuan, where the survey found only 12 per cent believed a sharp depreciation would take place this year. If Beijing did devalue, 48 per cent expected the Hong Kong dollar peg to remain, against 40 per cent last month. Nevertheless, the survey revealed fund managers had become slightly more bearish on regional equities in anticipation of tightening interest rates. Of the fund managers, 86 per cent believed US interest rates would be higher in 12 months while 50 per cent expected higher Hong Kong interest rates.