Frontier Preview for the Week of June 22, 2025

June 22, 2025

Here's a look at the main drivers in Frontier Markets this week.

Frontier FX was mixed last week despite the dollar’s broad gains against the majors. UYU, JMD, and BOB outperformed while KZT, UAH, and CRC underperformed. Frontier FX should remain under pressure this week as risk off impulses pick up even further, but we believe the underlying dollar bear trend will eventually reassert itself on weaker U.S. data that calls the Fed’s hawkish hold into question.

EUROPE/MIDDLE EAST/AFRICA

Iceland reports June CPI data Friday. Headline eased to 3.8% in May vs. 4.2% in April, which put it back within the 1-4% target range. At the last meeting May 20, Sedlabanki cut rates 25 bp to 7.5%, as expected. This was the second straight 25 bp cut after two straight 50 bp cuts. The bank noted that “inflationary pressures remain,” adding that “Further interest rate cuts will depend on whether inflation moves closer to the bank’s 2.5% target.” If inflation continues to ease, we could see another 25 bp cut at the next meeting August 20.

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