BNY Mellon On Recent Asia FX Flows ​

BNY Mellon comments on recent FX flows, noting reduced Baht demand in the aftermath of the election, SGD demand has picked up, while CNY inflows from early May have reversed into outflows, likely as a result of increased offshore hedging activity.

• "iFlow currency flows over the past week were mixed and light overall. Worth noting, however, were developments in THB, SGD and CNY. Strong demand for Thailand's baht since late March flattened out last week as the country headed into a general election last Sunday. Singapore's dollar posted outsized demand: weekly average scored flows of nearly 1.5 standard deviations, the strongest demand since early December 2022. Strong inflows into China's yuan in early May reversed into outflows. We believe this might owe to increased hedging activity given not only accelerated demand for China equities but also signs of demand for both China government and corporate bonds; investors bought China corporate bonds for a third consecutive week, the longest stretch since December 2021."
  
  "Weekly average profitability of IDR (overheld) ~1.1% is the second-most profitable currency in iFlow; first is South Africa rand (underheld). IDR flows have been relatively subdued amid moderate selling in local equities and government bonds after strong buying in Q1. "