IMF Working Paper Asia and Pacific Department Understanding and Forecasting Inflation in Timor-Leste Prepared by Kohei Asao and Raju Huidrom* Authorized for distribution by Alasdair Scott February 2026 Understanding and Forecasting Inflation in Timor-Leste Kohei Asao and Raju Huidrom WP/26/24 IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessaril ...

Group 1: US-China Relations - The upcoming meeting between Presidents Trump and Xi is expected to be the first of four meetings this year, indicating ongoing diplomatic engagement [1] - Recent reports suggest that Chinese banks have been advised to limit their exposure to US assets, reflecting China's gradual effort at financial derisking to mitigate dollar volatility [3][4] - The market's reaction to these developments has been muted, particularly in the Treasury market, where the 10-year yield closed below 4.2% [6] Group 2: Currency Market Dynamics - The dollar has weakened across the board, with notable strength in the yen despite Japan's recent election results, indicating a shift in market sentiment [7] - There is a growing perception that the US has lost some trust among allies and investors, leading to a modest move away from the dollar as a hedge while maintaining US assets [8][9] - The administration's stance on a weaker dollar aligns with market trends, as the dollar is considered overvalued against most measures [12][14] Group 3: Supply Chain and Strategic Leverage - China is signaling its leverage in critical minerals and pharmaceutical precursors, emphasizing that financial dependence is mutual [11][10] - The US is taking aggressive steps to counter supply chain risks, particularly in critical sectors, although these efforts may take years to materialize [10] - Concerns are rising that the US is losing control over supply chains essential for defense and technology, which could impact its position in the evolving global order [17]

Also, political reporting that the president's that presidents Trump and China's shei will meet in the first week of April in what could be the first of four meetings for the two this year. So, let's bring in Dardrick McNeel, senior policy analyst at Long View Global and a CNBC contributor and Mark Chandler, chief market strategist at Banickburn Capital Markets. Gentlemen, great to have you here.Um, Dardrick, I'm going to start with you because obviously a lot of headlines in the last 24 hours regarding USC ...

Market Overview - The market is experiencing a shift with a new Fed chair nominee and a turn towards risk-off trading in certain sectors [1][2] - Interest rates have been stable recently, contributing to a resilient economy and strong corporate earnings [3][4] Fixed Income Performance - Emerging markets have been the best-performing area in fixed income year-to-date, indicating opportunities outside the US [6] - The yield curve is steepening, suggesting normalization in interest rates, with long-term rates higher than short-term rates [5] Investment Strategies - Investors are diversifying away from US-centric assets towards emerging markets, driven by attractive risk-return profiles [11] - Flows into option income ETFs have outpaced those into traditional dividend ETFs, reflecting a shift in income generation strategies [14] Bond Market Insights - Investment-grade credit, particularly in the triple B range, is recommended for its yield advantage with similar default risk [19] - Private credit is gaining attention, offering yields close to 7% with low duration, appealing to investors transitioning from money market funds [22] Economic Outlook - Credit fundamentals remain strong, with tight spreads indicating a robust economy [44] - The potential for volatility exists due to the new Fed chair and midterm elections, but the overall outlook for fixed income remains positive [38][41] Risks and Considerations - Attention is needed on private capital stocks, which may face stress, particularly in less liquid vehicles [27] - Investors should be cautious about extending duration too quickly and ensure a balanced portfolio to mitigate risks [50]

Joining us now, George Heel. He's the vice president of commodity research at George, great to have you with us. >> Thanks for having me.>> You know, it's funny that we we had this list of fundamental reasons why the metals would decline today and yet the move has been sort of memeish, which is by definition not pinned by fundamental drivers. So, what did you make of the of the drop today. Of course.Well, I think you know silver has obviously had a outsized move against gold over the last few months and thi ...

Gold Market Outlook - Gold has significantly outperformed the S&P 500 this year, with predictions from Goldman Sachs suggesting a price target of $4,900 to $5,100 by the end of 2026 [1][4] - Despite the bullish outlook, there is an expectation of a substantial pullback in gold prices, with central bank buying anticipated to resume and accelerate into 2026 [2][10] - The current price levels of gold may not justify initiating new positions, as the reward-to-risk ratio for new longs is considered unfavorable [5][6] Investment Strategies - Investors are advised to consider reallocating gains from gold into sectors with more constructive growth potential, such as AI [5][10] - Gold miners have shown tremendous returns, with ETFs like VANC gold miners ETF up over 160%, presenting a more conservative investment approach for 2026 [7][8] - The miners are expected to benefit from higher gold prices, maintaining larger profit margins even if gold prices stabilize [10] Silver Market Dynamics - Silver has seen a remarkable return of 150% this year, driven by its dual role as both an industrial and precious metal, particularly benefiting from electrification and AI demands [11][12][19] - The current market dynamics suggest that silver could still be a good buy even if it experiences a 15% decline, as it is positioned to take advantage of ongoing industrial demand [14][18] - There is a noted deficit in the silver market, which differentiates the current situation from past short squeezes [18][20] Copper Market Insights - Copper is on track for its largest annual gain since 2009, driven by the ongoing AI electrification buildout [15][17] - The medium to long-term outlook for copper remains positive, with expectations of continued structural deficits due to increasing industrial demand [17][24] - However, there are concerns about froth in copper prices, as current levels may not align with actual industrial demand [24] Comparative Analysis with Cryptocurrencies - Precious metals, particularly gold and silver, have outperformed cryptocurrencies this year, with gold up over 70% and silver up 165% year-to-date, contrasting sharply with Bitcoin's decline of 7% [28][30] - The liquidity and stability of precious metals are attracting investors away from the more volatile crypto market [29][30]

🇺🇸 NEW: Latest Fed study finds dollar's role in global debt markets rises and falls in cycles, not a steady trend toward greater dollarization or de-dollarization. https://t.co/tzBMjID19W ...

Core Viewpoint - The Central Bank of Argentina (BCRA) is considering lifting the ban on banks providing digital asset services, with potential new regulations expected by April 2026 [1][2]. Group 1: Regulatory Changes - The BCRA previously prohibited banks from facilitating cryptocurrency operations for clients, but the stance has shifted towards a more crypto-friendly approach following the election of President Javier Milei in 2023 [2]. - New regulations could allow banks to offer digital asset-related services, indicating a significant policy shift in Argentina's financial landscape [1][2]. Group 2: Cryptocurrency Adoption in Argentina - Argentina is recognized as a global leader in grassroots cryptocurrency adoption, largely due to an economic crisis characterized by triple-digit inflation, strict capital controls, and distrust in the local currency [3]. - The country ranks 15th globally for active crypto wallet users, with approximately 10 million users [3]. Group 3: Market Activity - From July 2023 to June 2024, Argentina is projected to have $91 billion in on-chain transaction volume, making it the most active crypto market in Latin America [4]. - Over 60% of this transaction activity involves stablecoins, which are utilized by Argentines to dollarize savings and safeguard purchasing power against currency devaluation [4]. Group 4: Regional Context - In Latin America, Brazil has established comprehensive laws for banks to provide crypto services, while Panama has a more permissive but less structured approach [5]. - El Salvador, which made bitcoin legal tender in 2021, has recently introduced a banking law allowing private banks to offer digital asset services to high-net-worth investors [5].

Core Insights - The shift of dollar-pegged stablecoins from trading tools to retail products is driven by inflation and weak currencies in various economies [1][2] - Tether's strategy involves allocating profits into Bitcoin while expanding USDT issuance, and OKX has launched a high-yield stablecoin wallet and card in Brazil [1][2] Group 1: Dollar Access and Local Economic Conditions - Tether's ongoing Bitcoin allocation is linked to the growth of USDT, providing dollar liquidity through continuous crypto operations [3] - The demand for dollar proxies may increase as local savings tools lose purchasing power, raising questions about the speed of retail flow migration [3] Group 2: OKX's Product Launch in Brazil - OKX's new wallet and card offer interest on dollar balances and facilitate easy conversion from reais to stablecoins [4] - The design of these tools reduces friction in spending and may prompt regulatory assessments on their interaction with local financial systems [4] Group 3: Implications of Dollar Tokens - Dollar tokens can enhance payment access and remittances but may also lead to increased dollarization and liquidity moving outside traditional banks [5] - Regulatory clarity on reserves and cross-border use will determine whether these services complement or replace local financial systems [5] Group 4: Market Structure and Liquidity - A larger base of retail dollar balances can support smoother settlement across cryptocurrency pairs and stabilize funding during market fluctuations [6] - Controlled expansion of stablecoin supply with reliable redemption can help recover liquidity faster after market shocks [6] Group 5: Transparency and Yield - Issuers offering yield should enhance transparency regarding reserves and conduct regular independent checks to maintain user trust [7] - Clear explanations of asset and liability shifts are essential to prevent liquidity strains during periods of volatility [7]

Currency & Economic Policy - The dollar provides a store of value for those escaping inflation resulting from lenient economic policies [1] - America should not actively promote dollarization [1]