Deutsche Bank notes that most EMFX continue...>

FOREX: Deutsche Bank notes that most EMFX continue to be net sold against the

dollar, with the exception of RUB where option flows have flipped from

significant selling to marginal buying. Selling in TRY has remained largely

unchanged at modest level. In contrast, selling in ZAR has fallen considerably

after significant selling seen over the last few weeks. The rest of the EM

currencies have been net sold at modest levels.

- Deutsche's EM Flow Indicator shows that outflows are emerging - the last two

weekly prints have been negative (indicating outflows from EM). The last time

there were two consecutive weekly outflow prints was in Dec 2016, thus this is a

significant development. However, the size of outflows remains relatively

contained, with the magnitude of the flow indicator nowhere near as stretched as

in late 2016. Therefore, it is likely that the recent sharp EM FX depreciation

has been driven more by FX hedging of EM assets held by foreign investors,

rather than the outright selling of these assets.