EM FX: Flows rotate on energy and risk – BNY

BNY’s iFlow data show heightened risk aversion, with bond buying concentrated in G10 and Eurozone debt while EM sovereigns are sold. FX flows highlight outflows from INR and EUR against demand for CNY and ZAR. Concerns over energy import stress and fiscal responses are driving FX sales in many surplus economies, with KRW and JPY the only overheld APAC currencies left.

iFlow signals defensive positioning

"Out of the ten currencies we see as being in the funding category, most are underheld because of low yields."

"At present, only KRW and JPY remain overheld but purchases are light, while many surplus economies are facing FX sales for fear of import stress and short-term fiscal impulse to reduce energy burdens."

"INR, TRY, EUR and SGD outflows stood out, against strong demand in CNY, ZAR, PLN and COP."

"Investors are in heightened risk aversion mode, with iFlow Mood accelerating in negative territory at -0.088."

"Bond buying picked up in pace, while equity demand flattened out."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)