Asia's swap markets anticipate interest-rate cuts

Swap markets in Asia are showing a growing expectation for interest-rate cuts, as the US dollar continues to weaken. This situation is benefiting local currencies, allowing central banks in places like India, Malaysia, and Thailand to focus on boosting economic growth. Recent data indicates that inflation is slowing down across several Asian countries, including Indonesia and the Philippines. This decrease in inflation signals that central banks might have more room to cut rates. Experts suggest that easing policies could also help mitigate potential economic challenges from upcoming tariff announcements by the US. In India, traders expect an additional 37 basis points in rate cuts within six months. The Indian rupee has improved slightly after record low levels, and inflation figures support the idea of more aggressive rate cuts. Falling oil prices are also helping to keep inflation in check. Malaysia's central bank has not yet shifted to a policy easing stance, but traders are anticipating a 25-basis point cut in the next year. The Malaysian economy could face risks from US trade policies, especially concerning semiconductor exports. In Thailand, swap markets expect rate cuts of up to 40 basis points over the next year. Although the central bank is cautious, the government's push for a looser monetary policy may influence this decision. However, any significant shifts in policy will likely be careful to avoid increased market volatility.