Foreigners sold Asian bonds in April amid firm dollar

Foreign investors were net sellers of Asian bonds for a second straight month in April as a strong U.S. dollar and uncertainties around the Federal Reserve's interest rate cuts dampened appetite, reports Reuters.

Investors net sold bonds worth $1.91 billion from Indonesia, India, Thailand, Malaysia and South Korea, although the disposals were was significantly lower than $4.69 billion in March.

The dollar index rose to as high as 106.51 last month, a 5-1/2 month peak. It ended the month up 1.76%, its largest gain in three.

Foreign investors withdrew about $1.7 billion from Indonesian bonds, marking a third month of outflows amid the rupiah weakening to a four-year low, which prompted a surprise interest rate hike by Bank Indonesia.

Indian bonds also experienced a shift, with these investors pulling out $1.31 billion, halting a year-long buying streak. In Thailand, the outflow continued for a fifth month, totaling about $881 million.

Conversely, South Korean and Malaysian bonds attracted $1.86 billion and $122 million worth of foreign capital, respectively.

However, the dollar has weakened this month after the Federal Reserve held interest rates steady, while a weaker than expected U.S. non-farm payrolls report and CPI data for April also tempered concerns about the U.S. economy overheating.