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Malaysia's economy grew at a slightly slower rate than expected last year due to weak global demand and a decline in exports and manufacturing activity. Gross domestic product (GDP) expanded by 3.7% in 2023, below the initial estimate of 3.8%. The economy grew by 3% in the fourth quarter, lower than the projected 3.4%. The slowdown in China, Malaysia's largest trading partner, has also affected its exports. Despite the challenges, the central bank expects the economy to improve in the future due to resilient domestic spending and a potential recovery in external demand. However, there are risks, such as the impact of limiting fuel subsidies and potential changes to domestic policy on inflation. [Extracted from the article]

Emerging Asia bonds are expected to benefit more than global bonds from a rally in US Treasuries due to the region's debt having tighter spreads over their US counterparts. South Korean, Indian, Malaysian, and Chinese debt all show narrow spreads, while bonds in Hungary, Colombia, Poland, and Mexico have relatively wider spreads. The Federal Reserve's indication of potential rate cuts has led to a decline in Treasury yields, making investments in emerging-market assets more attractive. Any signs of a dovish pivot by the Fed in June may allow regional policymakers to begin easing rates. [Extracted from the article]

The Malaysian ringgit has outperformed other Asian currencies in the past three months and is expected to continue gaining strength. Analysts predict that the ringgit will rise to 4.65 per dollar by the end of the year, driven by foreign inflows and income repatriation by state firms. The rebound in the ringgit is seen as more sustainable this time, with global funds returning to Malaysian assets and an improved export outlook. However, there are still risks from US-China trade tensions that could impact the ringgit and other Southeast Asian currencies. [Extracted from the article]

Goldman Sachs Group Inc. predicts that the Bank of Thailand will delay its monetary policy easing until the first half of 2025, instead of the previously expected second half of this year. This is due to the government's plan to increase spending to support economic growth, which reduces the pressure on the central bank to cut rates. The Thai government aims to boost consumption through a digital cash handout program, which is expected to increase the fiscal deficit to 4.3% of GDP. Traders have adjusted their expectations for rate cuts accordingly. Standard Chartered Bank Thailand has also delayed its rate cut call. [Extracted from the article]

Emerging Asia bonds are expected to benefit more than global bonds from a rally in US Treasuries due to the region's debt having tighter spreads over their US counterparts. South Korean, Indian, Malaysian, and Chinese debt all show narrow spreads, while bonds in Hungary, Colombia, Poland, and Mexico have relatively wider spreads. The drop in US yields has made investments in emerging-market assets more attractive, resulting in foreign inflows into Thai and Indonesian bonds. If the Federal Reserve signals a dovish pivot at its FOMC meeting in June, regional policymakers may begin easing rates due to widespread disinflation in the region. [Extracted from the article]

India and Indonesia are emerging markets that are attracting investors due to their growing populations and expected infrastructure spending. These countries stand out in the region as their populations are young and dynamic, unlike their aging peers. The working-age population growth in India and Indonesia is positively correlated with share-price valuations, making the financial sector a key beneficiary. Structural reforms and job creation are essential for these economies to capitalize on their demographic dividend. However, more progress is needed, especially in implementing labor and land policy changes. Investors should consider metrics such as the age-dependency ratio and fiscal burden when making long-term investments in sovereign debt. [Extracted from the article]

According to Fidelity International and BlackRock Investment Institute, emerging markets like India and Indonesia are attractive for investors due to their growing populations. Both countries are expected to experience a boom in infrastructure spending, which will benefit their economies. India and Indonesia have young labor forces, which is seen as a strength compared to other countries in the region that are facing rapid aging. The working-age population growth in these countries is positively correlated with share-price valuations. Structural reforms and job creation are important for these economies to capitalize on their demographic dividend. [Extracted from the article]

The recent rally of the US dollar may be coming to an end as cooling US price pressures and China's recovery provide reasons for traders to sell. A Bloomberg gauge of the dollar fell to a one-month low following a report showing a decrease in underlying US inflation in April. The dollar's decline may be due to multiple factors, including the impact of US Consumer Price Index (CPI) data. Additionally, the dollar is vulnerable to declines as risk sentiment improves and the yuan strengthens. Swaps are currently pricing in a high likelihood of a rate cut by US policymakers in September. However, some Federal Reserve officials believe more evidence of disinflation is needed before considering rate cuts. Traders will be monitoring US jobless claims figures and speeches from Fed officials for further insights into the US rate trajectory. [Extracted from the article]

Emerging Asian bonds may not experience as much growth as global bonds due to the reluctance of central banks in the region to implement significant interest rate cuts. Inflation-adjusted yields in emerging Asian countries are currently the lowest compared to historical performance, which may discourage central banks from lowering rates. Asian policy makers are also concerned about weaker local currencies. In contrast, Latin American central banks have already begun easing cycles. High-yielding markets like Brazil and Mexico are expected to benefit from the improved risk environment. [Extracted from the article]

Emerging Asian bonds may not experience as much growth as global bonds due to the reluctance of central banks in the region to implement significant interest rate cuts. Inflation-adjusted yields in emerging Asian countries are currently the lowest compared to their historical performance, which may discourage central banks from easing rates even as the market anticipates a shift from the Federal Reserve. On the other hand, central banks in Latin America, such as Mexico and Brazil, have already begun the easing cycle. Overall, high-yielding markets like Brazil and Mexico are expected to benefit from the improved risk environment. [Extracted from the article]

Indian bonds are performing well compared to other Asian bonds despite fluctuations in US Treasuries. This makes Indian debt more attractive to investors, especially with its upcoming inclusion in major global indexes. Factors such as fiscal prudence, rupee stability, and positive domestic developments are contributing to the stability of Indian bonds. Additionally, India's foreign-exchange reserves are at a record high, and the rupee is the best-performing currency in emerging Asia. The government's reform programs and the possibility of Prime Minister Narendra Modi winning a third term are also boosting the appeal of Indian assets. [Extracted from the article]

Singapore's sovereign bonds are attracting buyers as the country's tight monetary policy helps control inflation. The yield on Singapore's 10-year note has dropped to 3.28% from a six-month high of 3.47%, indicating potential for further declines. The Federal Reserve's less hawkish stance and Singapore's low core inflation are also encouraging investors. Singaporean bonds have provided a return of 1.5% to dollar-based investors this month, making them one of the top performers in emerging Asia. The Monetary Authority of Singapore's restrictive policy has helped ease inflationary pressures and bond yields. [Extracted from the article]

Asian currencies are experiencing their best week in nearly two months due to increased intervention efforts and rhetoric from regional policymakers. The Bloomberg Asia Dollar index has risen by 0.4% this week, driven by suspected currency intervention from central banks, particularly in Japan. The Federal Reserve's less hawkish signals have also supported regional currencies. This comes after Asian currencies have declined against the strong US dollar this year, but recent intervention measures and a wait-and-see approach from the Fed have shifted the outlook. [Extracted from the article]

According to strategists, the South Korean won is expected to recover after reaching its lowest level in over a year. This optimism is based on signs of central bank support and an increase in exports. The currency may strengthen further due to improved demand for the nation's tech products and the potential easing cycle of the Federal Reserve. While some investors believe the Bank of Korea may work to slow the depreciation, others think the 1,400 level may not be a line in the sand for the authority. Recent data also shows signs of economic revival, with increased exports and higher-than-expected GDP growth. The won may gain further by the end of the year, reflecting a positive view of the economy. [Extracted from the article]

The Bank of Japan (BOJ) has made a dovish move by largely leaving its monetary policy settings unchanged, which is expected to lead to further weakness in the yen. Some analysts predict that the yen could weaken to 160 per dollar, while others anticipate widening local credit spreads. Governor Kazuo Ueda's rhetoric during the press conference was seen as dovish, causing the yen to slide further. Overall, the market expects the yen to remain weak, and there is a possibility of intervention by the Japanese government. [Extracted from the article]

The Philippine central bank, Bangko Sentral ng Pilipinas (BSP), is considering delaying monetary easing due to concerns about inflation and a weak peso. The BSP has a history of dealing with intense price pressures and is seen as the most "inflation-sensitive" central bank in the region. As a result, the country's 10-year bond yields have risen significantly in April, outpacing other emerging Asian markets. Inflation in the Philippines is expected to continue rising, and the BSP has raised its inflation forecast, indicating that bond yields may continue to increase. The risk of inflation and currency depreciation is not unique to the Philippines, as other countries in the region have also taken measures to combat inflation. [Extracted from the article]

Malaysia's assets have remained strong despite a general decline in emerging markets, thanks to positive economic prospects and potential support from local funds. The country's currency, the ringgit, has seen a slight increase and is one of the top performers in emerging Asia. Factors contributing to this include higher oil prices, strong economic growth in the first quarter, and the encouragement from Malaysia's central bank for state-linked firms to repatriate foreign investment income. The bank has also expressed its readiness to support the currency. [Extracted from the article]

The Mexican peso experienced a significant decline, dropping over 6% against the dollar, due to escalating conflict in the Middle East. This has affected the currency, which has been a popular choice for carry trades. The peso had previously reached its strongest level in almost nine years, driven by high local interest rates and low currency volatility. However, the recent news of an Israel retaliatory strike on Iran has caused concern in the market, leading to a potential reduction in emerging market positions. The outlook for carry trades is also worsening as volatility increases. [Extracted from the article]

The resurgent dollar has had a significant impact on global currencies, weakening many and prompting officials to intervene. China's decision to weaken its daily reference rate for the yuan added to the selling pressure, with the Indonesian rupiah, Indian rupee, and South Korean won being particularly affected. Geopolitical tensions and stronger-than-expected US retail sales data have contributed to the dollar's gains, while Iran's attack on Israel has increased demand for safe-haven assets. The strength of the dollar has led to currency intervention in emerging markets, particularly in Asia, and any weakening of China's currency could have a widespread effect. [Extracted from the article]

Traders in Asia are becoming less optimistic about rate cuts in emerging markets such as South Korea, Malaysia, and Thailand. This shift is driven by the need for these countries' central banks to defend their currencies. The Bloomberg Asia Dollar Index has fallen for the fourth consecutive month, as solid US economic data and more hawkish bets for the Federal Reserve attract investors to the dollar. While central banks in the region have primarily used non-rate tools to support their currencies, more aggressive policy action may be necessary if the weakness persists. [Extracted from the article]

Emerging market currencies have dropped to their lowest levels in 2024 due to the resurgent dollar. The weakening of the yuan by China has added to the pressure, particularly affecting the Indonesian rupiah and South Korean won. The dollar's strength is attributed to heightened geopolitical tensions and robust US data, which has increased bets that the Federal Reserve will delay interest-rate cuts. The conflict between Iran and Israel has also contributed to the increased demand for the dollar as a safe haven. This situation has led to currency intervention across emerging markets, especially in Asia, as officials try to counter the pressure from the strong dollar. [Extracted from the article]

Emerging-market currencies have been declining as the US dollar strengthens. This is due to the US economy outperforming other economies, leading to reduced expectations of interest rate cuts by the Federal Reserve. The dollar's rally has been driven by "US exceptionalism" and positive economic data. The prospect of higher US interest rates has made holding dollars more attractive than investing in emerging markets. Asian currencies have been particularly affected, as their central bank rates are lower than in other emerging markets. Asian central banks have taken measures to support their currencies, such as using currency fixing and selling dollars. However, they must be cautious not to deplete their foreign reserves too quickly. [Extracted from the article]

Bank Indonesia has intervened to support the rupiah after the currency weakened beyond 16,000 per dollar for the first time in four years. The central bank stated that it intervened mainly in the spot and domestic non-deliverable forwards markets, attributing the rupiah's weakness to risk-off sentiment and dollar gains. The decline in the rupiah adds pressure on Bank Indonesia as it aims to maintain stability in the currency amidst persistent dollar strength and foreign capital outflows. The rupiah has been under pressure due to concerns about President-elect Prabowo Subianto's spending plans and a hawkish repricing of Federal Reserve interest-rate expectations. [Extracted from the article]

Malaysia's central bank, Bank Negara Malaysia, has pledged to support the ringgit as it approaches its lowest level since 1998. The bank will ensure the orderly functioning of the foreign exchange market with the help of government-linked firms, corporations, and exporters. The ringgit has been affected by the strength of the US dollar, tensions in the Middle East, and the sluggish economic outlook for China. However, the country's net oil exporting economy may receive some support from rising oil prices. [Extracted from the article]

Bank Indonesia has intervened in the currency market to stabilize the rupiah, which fell to a four-year low due to a strong dollar rebound and significant bond outflows. The currency recovered slightly against the greenback but was still impacted by factors such as high food costs and concerns over President-elect Prabowo Subianto's spending plans. The rupiah's decline is part of a broader trend in Asia, with other countries also taking measures to support their currencies. Bank Indonesia remains optimistic that the pressure on the rupiah is temporary and manageable. [Extracted from the article]

The Indonesian rupiah has reached a four-year low against the US dollar due to a rebound in the dollar's strength and foreign investors selling local bonds. Concerns have arisen over the incoming administration's plans to increase spending, which could potentially strain the country's budget. Additionally, a cabinet rift has been reported. The weakening of Asian currencies, including the rupiah, is also attributed to expectations that the US Federal Reserve will maintain higher interest rates for a longer period. [Extracted from the article]

Foreign investors are becoming more cautious about investing in emerging Asian bonds due to the rising cost of hedging, which is reducing returns. Inflows into markets like South Korea and Malaysia have either slowed or reversed. The cost of swapping dollars for local currency has increased, and this is expected to continue as the Federal Reserve is predicted to cut interest rates, further eroding returns on dollar-hedged investments. It is important to note that while forward points have increased, they still remain negative in absolute terms. Malaysian bonds have seen a net foreign bond outflow of $263 million in the first two months of the year, after a $3.8 billion inflow in 2023, and global inflows into Korean bonds have fallen to $6.4 billion so far this year, after a $60 billion inflow in 2023. Investors should also be aware of currency policies in the region, as the People's Bank of China's weaker currency fixing has led to speculation that it is loosening its grip on the yuan. The rate gap between the US and emerging Asian nations, which made it attractive for foreign investors to borrow Asian currencies, is expected to narrow as the Fed is forecasted to trim rates this year. The Fed is expected to cut rates by a cumulative 75 basis points this year, while central banks in South Korea, Malaysia, and Singapore are not expected to be as dovish. Bank Indonesia and the Reserve Bank of India may try to match the Fed in terms of [Extracted from the article]

The yuan has become an attractive funding currency for the global emerging-market carry trade due to the end of super-easy monetary policy in Japan and a surprise rate hike in Taiwan. Investors are reassessing their strategies after a pause in dollar-funded trades, and the yuan compares favorably to the Taiwan dollar and the greenback in terms of yield and volatility. China's managed currency has been kept in a tight range by Beijing, with little room for appreciation. The yuan's low volatility and stable trading range make it a strong candidate for carry trades. [Extracted from the article]

The yuan's appeal as a funding currency for the global emerging-market carry trade has increased due to the end of super-easy monetary policy in Japan and a surprise rate hike in Taiwan. Investors are reassessing their strategies after a pause in dollar-funded trades, and the yuan is seen as an ideal funding currency due to its low volatility and limited scope for strengthening. China's managed currency has been kept in a tight range by Beijing, and its low volatility and stable trading range make it suitable for carry trades. The yuan's one-month implied volatility hit its lowest level since 2017 earlier this month. [Extracted from the article]

International investors have withdrawn $1.1 billion from Indonesian bonds since the recent election, due to concerns over the new president's fiscal promises and potential spending spree. Incoming President Prabowo Subianto's plan to provide free school lunches and milk to millions of children has spooked investors, as it could lead to a budget deficit larger than the entire 2023 budget. Real money and hedge funds have expressed concerns over the lack of details on how these programs will be financed. The potential fiscal loosening has raised worries about fiscal consolidation and increased funding costs for the government. [Extracted from the article]

The Bank of Japan's decision to end its negative-interest-rate policy has not caused significant disruption in the markets, as it was anticipated in advance. Analysts believe that Japanese stocks will continue to rally, as investors expect future rate increases to be gradual. The decision also allows the Bank of Japan to potentially reduce bond purchases in the future, although they will continue to buy bonds for now to prevent a surge in yields. Overall, the decision is seen as a positive endorsement that deflation is on its way out and reflects a recovery in the Japanese economy. [Extracted from the article]

The Bank of Japan's decision to end its negative-interest-rate policy has not caused significant disruption in the markets, as it was anticipated by investors. Analysts believe that future rate increases will be gradual, which could lead to further gains in Japanese stocks. The end of negative interest rates may require investors to be more cautious about credit risk. The press conference from BOJ Governor Kazuo Ueda is expected to provide further insight. Overall, the decision is seen as a positive endorsement of the recovery in the Japanese economy. [Extracted from the article]

Malaysia's ringgit has been performing well in comparison to other emerging Asian currencies, making it an attractive option for investors looking to buy the country's bonds. The currency has strengthened by about 0.5% in March, partly due to the central bank's encouragement for state-linked firms to repatriate and convert their overseas earnings. Other factors contributing to the positive outlook for Malaysian bonds include improving exports and a stable inflation rate. Malaysian local-currency sovereign bonds have returned 1.1% to dollar-based investors this month, outperforming emerging Asian debt as a whole. Foreign bond inflows have also been supportive of the ringgit, with overseas investors buying a net $119 million of Malaysia's conventional government bonds in February. [Extracted from the article]

Malaysia's ringgit has been performing well this month, strengthening by almost 0.8% in March. This has made Malaysian bonds an attractive investment option, especially with improving exports and a stable inflation rate. The recent outperformance of Malaysian bonds can be attributed to the rebound of the ringgit, which had hit a 26-year low last month. The government and central bank's efforts to support the currency have motivated exporters and local investors to favor ringgit deposits and investments. Additionally, Malaysian exports have seen a significant increase, ending 10 months of annual declines. Overseas investors have also shown interest in Malaysian government bonds, with net purchases of $119 million in February. Experts recommend staying tactically FX-unhedged in Malaysian bond positions, as the ringgit tends to outperform regional currencies when the regulator steps up support after a period of weakness. [Extracted from the article]

Asian nations are experiencing a resurgence in inflation, primarily driven by a surge in food prices. This increase in inflation poses a risk to emerging Asian bonds, potentially delaying interest-rate cuts by central banks in the region. Taiwan and the Philippines, in particular, are facing challenges in easing monetary policy due to resilient core price momentum. The returns on emerging Asian bonds have been lower this quarter compared to the previous quarter, largely due to less favorable inflation conditions domestically and in the US. The Federal Reserve's cautious approach to cutting interest rates is reinforced by the increase in underlying US inflation. The impact of El Nino is also contributing to higher food prices in countries like the Philippines and Indonesia. Overall, the inflationary pressures in emerging Asia may hinder the performance of Asian bonds. [Extracted from the article]

The ringgit, Malaysia's currency, is on track for its best weekly gain in eight months due to efforts by the central bank to strengthen it. The currency rebounded from a 26-year low after the Bank Negara Malaysia encouraged state-linked firms to repatriate and convert their overseas income. The bank also kept its key policy rate unchanged and called the ringgit undervalued. Experts predict that possible Federal Reserve rate cuts and a rebound in exports will further support the ringgit. [Extracted from the article]

Currencies and bonds in emerging Asia are becoming less correlated as domestic factors become more influential. The correlation between the region's 10-year yields and dollar-Asia currencies has decreased, allowing internal factors like regional policy easing to impact local currencies and bond prices. Central banks in China, Thailand, and South Korea are signaling a willingness to diverge from the Federal Reserve and other major central banks, leading to expectations of rate cuts. However, the risk of sticky prices continues to be a concern for policy decision-making. [Extracted from the article]

Central bank independence is becoming a contentious issue in emerging markets, which is concerning for currency and bond investors. Recent conflicts between governments and central banks have put pressure on currencies such as the Thai baht, Hungarian forint, Brazilian real, and Turkish lira. The autonomy of central banks is a crucial factor for investors when allocating capital in emerging market currencies and sovereign debt. These tensions have escalated due to the global economic challenges and high interest rates, leading to capital outflows and lower returns. [Extracted from the article]