Asian Bonds Attract Significant Foreign Inflows in March

(Reuters) – Asian bonds attracted the largest monthly foreign inflows in seven months in March, driven by hopes of rate cuts from regional central banks and their appeal as a haven as global assets were impacted by worries over U.S. tariffs and a potential recession.

Foreigners purchased a net $7.16 billion worth of regional bonds during the month, marking their largest monthly net purchase since August 2024, according to data from regulatory authorities and bond market associations in South Korea, India, Indonesia, Thailand, and Malaysia.

Earlier this month, U.S. President Donald Trump introduced sweeping tariffs on key trading partners, intensifying fears of a global economic slowdown. However, he later rolled back the steep duties on dozens of countries for a 90-day period.

India and the Philippines’ central banks have cut interest rates this month, following concerns over growth after Trump’s tariff announcements.

South Korean bonds attracted strong inflows for a second consecutive month, totaling $3.99 billion—the highest since October 2024.

Indian bonds saw net inflows of $1.11 billion, marking the largest monthly gain in seven months. Meanwhile, Indonesian, Malaysian, and Thai bond markets recorded cross-border inflows of $900 million, $732 million, and $421 million, respectively.

“The 90-day tariff pause provides some breathing space, but there is no guarantee whether Asian economies (apart from China) will be able to negotiate preferential treatment,” said Khoon Goh, head of Asia research at ANZ.

“The ongoing uncertainty will remain, which means portfolio flows in the region will continue to be volatile.”