Emerging East Asian Local Currency Bond Markets: A Regional Update
Issue: March 2025
Heightened global uncertainty over shifts in economic policies and higher-for-longer interest rates in the United States led to a slight weakening in emerging East Asian financial markets between December 2024 and February 2025, according to the Asia Bond Monitor March 2025 issue. Most markets saw currency depreciation, portfolio outflows, and widened risk premiums. Bond yields declined, following continued central bank easing in the region and falling yields in the United States. Liquidity conditions in emerging East Asia generally improved in 2024, supported by regional monetary easing. Total local currency bonds outstanding expanded 9.6% year-on-year to USD26.3 trillion, while the ASEAN+3 sustainable bond market grew 12.1% year-on-year to reach USD917.6 billion at the end of 2024. This edition of the Asia Bond Monitor features special discussions on (i) the role of artificial intelligence in financial markets, (ii) how sovereign sustainable bond issuance can support private sustainable bond finance, and (iii) how sustainability-linked bonds can promote sustainable outcomes.