Asian debt markets witness foreign capital outflows caused by U.S.

Asian debt markets took an unexpected turn, with foreign investors pulling out large sums of money in November, the first outflow in the past seven months. According to Reuters, expectations of policy changes after the Trump administration takes office, coupled with a surge in the U.S. dollar, have led to weaker investor interest.

Also read: How the dollar dominates the global trade space

Data collected from various regulators and bond market associations showed net withdrawals of $1.92 billion from the bond markets of Indonesia, Thailand, Malaysia, India and South Korea. It was the first monthly net sales since April, reflecting growing investor concerns about potential trade restrictions.

Khoon Goh, head of Asia research at ANZ, commented: “Markets are starting to price in the impact of the incoming Trump administration on Asia and the outlook for U.S. interest rates.” This sentiment highlights investors’ cautious approach to potential changes in trade dynamics.

Indonesia’s foreign investors pulled about $1.8 billion from its bond market, breaking a six-month strong buying trend. Similarly, total foreign capital outflows from the Thai and Malaysian bond markets were approximately US$1.08 billion and US$257 million respectively, declining for a month in a row.

By contrast, South Korean bonds attracted $1.07 billion in foreign inflows, continuing five months of net buying, driven by its impending inclusion in the FTSE Russell World Government Bond Index (WGBI) from November 2025. Meanwhile, net buying in India’s debt markets was moderate. Inflows of $145 million showed investors were cautiously participating during a period of fiscal uncertainty.

A stronger U.S. dollar also played a role, hitting a two-year high after the election, and caused Asian currencies such as the Malaysian ringgit, Thai baht and South Korean won to depreciate, each losing nearly 1.5% against the dollar. This currency fluctuation further led to a shift in investment preferences as regional bonds faced reduced demand from foreign entities.

Source: IndexBox Market Intelligence Platform