Most Asian bonds witnessed foreign inflows in January, driven by hopes that the U.S. Federal Reserve would slow down the pace of its monetary tightening as inflation worries subsided.
Foreigners purchased a combined net total of $4.3 billion in Indonesia, Malaysia, Thai and Indian bonds, data from regulatory authorities and bond market associations showed.
Asian currencies posted solid gains against the dollar last month, supported by upbeat demand for regional bonds.
Analysts said outflows from South Korean bonds were partly due to the concerns about liquidity woes at state-owned electricity company Korea Electric Power Corp (015760.KS).
The dollar, however, has strengthened so far this month as recent economic data such as consumer prices, hiring and retail sales showed a higher reading, prompting worries that the U.S. Fed still has further to go in tightening rates.
"If inflation does not recede as expected, the possibility of a Fed over-tightening will be negative for fund flows into Asia.
