EM FX was mixed last week. The rebound in oil helped some, such as COP, RUB, and MXN. On the other hand, idiosyncratic political risks weighed on South Africa. This week could pose a challenge to EM, with lots of Fed speakers, FOMC minutes, and US jobs data.
Thailand reports March CPI Monday, which is expected to rise 1.30% y/y vs. 1.44% in February. If so, this would be moving closer to the bottom of the 1-4% target range. BOT just left rates steady at 1.5% last week. We expect inflation to pick up again, and so BOT should tilt more hawkish as the year progresses. Next policy meeting is May 24, and we expect steady rates again.
Indonesia reports March CPI Monday, which is expected to rise 3.80% y/y vs. 3.83% in February. The target range is 3-5%, but Bank Indonesia has signaled that the easing cycle is over, and should lean more hawkish this year if inflation continues to rise. Next policy meeting is April 20, we expect rates to be kept steady at 4.75%.
Turkey reports March CPI Monday, which is expected to rise 10.70% y/y vs. 10.13% in February. Inflation is moving further above the 3-7% target range, and the central bank hiked the Late Liquidity Window lending rate 75 bp to 11.75% at its last policy meeting. If price pressures continue to rise, the central bank may have to tighten again at its next policy meeting April 26.
Korea reports March CPI Tuesday, which is expected to rise 2.1% y/y vs. 1.9% in February. The inflation target is 2%, and so BOK should tilt more hawkish if inflation continues to rise. Next BOK meeting is April 13, and we expect rates to be kept steady at 1.25%. Korea reports February current account data Wednesday.
Hungary reports February retail sales Tuesday, which are expected to rise 3.5% y/y vs. 3.8% in January. It reports February IP Wednesday, which is expected to rise 3.0% y/y vs. 1.6% in January. February trade will be reported Friday. The economy remains robust, and yet the central bank just eased policy more than expected last week. The cap on 3-month deposits was cut to HUF500 bln for end-Q2 from HUF750 bln for end-Q1.