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Asian bond curves may steepen further on expectations of monetary easing and rising US Treasury yields. Thailand’s 2s10s spread is at its widest since September, with similar moves in India, South Korea, and the Philippines. Asian central banks may cut rates soon, supported by a weaker USD, though long-end yield spikes may undermine easing efforts.
Azerbaijan’s finance ministry presented a medium term 2026-2029 framework, which includes assumptions of oil prices at USD 65/bbl for the whole period, and the currency peg to the USD staying at 1.70. Annual economic growth is expected at 3.9%, with the non-oil sector rising 5.1% a year. The budget deficit is projected to decline from 2.2% in 2026 to 1.3% in 2029, though debt to GDP is expected to rise from 30.5% to 32.7%. Meanwhile, the central bank has stopped publishing the results of its foreign exchange auctions, citing market and rate stability, though purportedly reducing transparency.
Kazakhstan’s central bank has said foreign investors began reducing portfolio holdings in the country after the US announced new tariffs recently. The NBK added that market conditions have stabilized more recently.
The central bank of the DR Congo held its benchmark rate at 25%, citing rising global risks. Governor Malangu Kabedi-Mbuyi warned that the Ukraine war, Middle East conflicts, and US tariffs could slow global growth and fuel inflation, with adverse effects on Congo’s economy.
Nigeria’s inflation rose to 24.2% YoY in March from 23.2% in February, reversing last month’s decline. Core inflation stood at 24.43%. The increase reflects Eid-related demand, currency depreciation, and rising logistics costs. Markets expect a potential rate hike or tighter liquidity at the May monetary policy meeting.
Kenya’s central bank will lift its moratorium on new commercial bank licenses on July 1, ending a freeze in place since Nov. 2015. The decision follows improved governance, recent M&A activity, and the raising of minimum core capital requirements to KES 10 bln under last year’s Business Laws Amendment Act.
Namibia’s central bank held its benchmark rate at 6.75%, citing global trade tensions and FX-driven inflation risks. Governor Gawaxab noted that slower global growth may soften commodity prices, but this is being offset by a weaker currency. The bank raised its inflation forecasts to 4.2% for 2024 and 4.5% for 2025.
JPMorgan recommended buying Argentina’s peso-denominated Lecap notes maturing on August 15, 2025, calling the recent FX regime shift a “game changer” for local markets. Strategists said the IMF deal and easing of currency controls support a more bullish view, with short-term yields expected to remain attractive. They favor short-term FX carry trades over long-duration bets, citing improved risk-reward and likely tight local liquidity.
Motorists in Maputo are facing fuel shortages amid a worsening foreign-currency crunch, with long queues forming at stations with available supply. The spread between the official and parallel FX rates is widening as informal USD demand surges. Mozambique’s trade deficit and project delays—including a USD 20 bln LNG export project—are fueling the shortage, expected to persist until at least 2028. FX reserves slipped to USD 3.68 bln in January, according to Banco de Mozambique.
Paraguay’s central bank raised its 2024 GDP forecast to 4% from 3.8%, citing stronger performance in retail, construction, and meatpacking. Argentina’s recovery is also expected to boost activity. Inflation is forecast to end the year at 3.8%, converging to the 3.5% target by 2026.
Peru’s economy grew 2.7% YoY in February, below the 3.4% consensus. The government still targets 4% growth in 2025, though analysts expect 3%, below 2024’s 3.3% pace. The US has imposed a 10% tariff on Peruvian exports, potentially impacting blueberry and grape shipments. The central bank held its policy rate at 4.75% for the third consecutive month, citing rising trade-policy uncertainty.
Laos’ economy is projected to grow by 3.9% in 2025 and 4.0% in 2026, supported by logistics and tourism, according to the ADB. The central bank’s policy tightening in late 2024 helped stabilize the exchange rate and slow inflation, with the kip depreciating 5.4% vs. USD but gaining 1.2% against the THB. Annual inflation averaged 23.3% in 2024 and is forecast to fall to 13.5% in 2025 and 10.4% in 2026.
Pakistan’s remittances surged 37% YoY to a record USD 4.1 bln in March, according to the State Bank. This beats the previous USD 3.16 bln high from June and signals recovery supported by the IMF loan program. The central bank raised its full-year remittance forecast to USD 38 bln from USD 36 bln and expects FX reserves to reach USD 14 bln by June.
US Treasury Secretary Scott Bessent expressed confidence that Argentina will repay its USD 18 bln China currency swap if reforms continue. His visit signals US support for President Milei’s economic plan, which includes easing capital controls and securing USD 12 bln in up-front IMF funding.
Last week, IMF staff and Honduras reached a staff-level agreement on the third review of the EFF/ECF programs. Board approval, expected in June, would release USD 155 mln. The IMF said the economy remains resilient and praised fiscal discipline ahead of elections. Honduras’ economic activity rose 2.2% YoY in February, down from 4.3% in January, per the central bank.
Peru’s central bank held the policy rate steady at 4.75% amid uncertainty from US-China trade frictions. Inflation stands at 1.3% and is expected to rise to 2% in the coming months. The country is seeking to avoid a 10% US tariff on key exports and is forecasting 3% GDP growth, with the government aiming for 4%.
The Government of Vietnam reaffirmed its 2025 GDP growth target of 8% or higher, prioritizing macro stability and economic restructuring. The resolution notes that the global economic and political landscape remains complex and volatile, with ongoing military conflicts, escalating trade tensions, and disrupted global value chains. Domestically, the country faces increasing challenges such as extreme weather, electricity supply risks, and inflationary pressure.
Kazakhstan’s central bank held interest rates at 16.5% during its policy meeting on Friday. The bank noted that inflation has accelerated but remains within the forecasted range of 10.0-12.0%, and that non-food CPI and services prices have moderated recently. Further, the committee saw a high probability of interest rates being held during the upcoming meetings. Finally, President Tokayev announced economic growth in Q1 2025 was 5.8%, up from 4.8% in the previous quarter.
Serbia’s annual inflation rose 4.4% in March, down slightly from 4.5% in February. FX reserves dropped by USD 265 mln in March to USD 28.5 bln, the central bank has announced, owing to foreign exchange market interventions and sovereign debt repayment. Further, the energy minister has announced the construction of two new gas pipelines by 2028, connecting Serbia to North Macedonia and Romania, alongside construction of a new pipeline to Hungary.
Nigeria’s naira has weakened more than 5% vs. USD this month, making it the world’s second-worst performer. The central bank sold USD 198 mln last week and USD 459 mln this week to support the currency. Most African countries are avoiding FX intervention due to low reserves and debt priorities.
Moody’s revised Zambia’s outlook to Positive from Stable and affirmed the Caa2 rating, citing a sustained debt reduction path driven by stronger growth, fiscal tightening, and a more stable kwacha. External risks have eased on higher reserves, export gains, and reduced food and energy imports. Falling copper prices are not currently seen as a major concern.
Brazil’s annual inflation rose to 5.48% in March—the highest in two years—exceeding forecasts. Economic activity grew 0.44% MoM in February. The inflation spike may prompt a rate hike from the current 14.25% at the May 7 central bank meeting, with investors wary of further trade tensions under Trump.
Officials from China, Japan, and South Korea met in Malaysia to discuss the impact of US tariffs on global and regional economies. The talks took place during the ASEAN+3 Finance and central bank Deputies’ Meeting, where the PBoC reaffirmed its commitment to a “moderately loose” monetary policy to support financial stability and economic recovery.
The IMF forecasts that assets of Azerbaijan’s state oil fund SOFAZ will steadily increase over the coming years from USD 60.0 bln at the end of last year, to USD 62.2 bln by 2030. The fund also expects a slight decrease in central bank reserves over this period, though only by USD 200 mln. Further, the ADB says it expects the fiscal deficit in Azerbaijan to widen this year to 2.4% of GDP, before narrowing to 2.0% in 2026. It expects moderate economic growth this year of 4.2%, with inflation remaining a persistent risk.
The Serbian central bank has held policy rates at 5.75%, in line with expectations. Inflation remains within expected levels, and towards the upper end of the central bank target range of 1.5 to 4.5%. The bank also noted a slight slowdown in domestic economic activity at the start of the year.
The Kenyan shilling has remained stable since August, supported by proactive measures from the Central Bank of Kenya (CBK), elevated interest rates, and tightened foreign exchange regulations. While the currency appears slightly overvalued, it is protected by the CBK’s foreign reserves, which, although reduced from March’s peak, stand at a robust USD 9.936 bln, exceeding the five-year average and the CBK’s target of four months’ import cover.
The Central Bank of Costa Rica (BCCR) decided to keep its monetary policy rate (MPR) unchanged at 4.0%. The MPR has remained at this level since October 2024, after the end of a 500bps easing cycle. The BCCR highlighted increased external uncertainty and flagged inflationary risks from higher production costs due to increased tariffs and potential foreign exchange pressures linked to sudden portfolio adjustments globally.
The recent rally in Indian bonds signals more to come despite pressure on the rupee. The Reserve Bank of India has shifted its stance from neutral to accommodative, leaving room for further interest rate cuts as inflation recedes. Economic growth is prioritized amid softening consumption. Although tariff delays offer some relief, ongoing friction between the US and China clouds the global growth outlook, ensuring that the RBI remains growth-focused. Traders are pricing in a drop in the benchmark rate to 5.5%, with some analysts expecting up to 75 to 100 bps of easing.
Ukraine’s inflation rose to 14.6% YoY in March, slightly above economist expectations of 14.2%, and up from 13.4% in February. The central bank will meet next week to set policy rates, following a 100 bps hike in March.
Central Bank of Kenya Governor Thugge stated that US tariffs currently have a minimal effect on trade and will not disrupt Kenya’s balance of payments. However, he expressed concerns over rising bond yields, which could challenge budget funding and discourage issuing Eurobonds. Thugge plans to continue discussions with the IMF at the spring meetings, seeking standard quota access. He also expects a UAE loan this fiscal year.
