Asian governments re-think foreign flows to domestic bond markets

Indonesia’s problems have reignited debate about how countries can protect themselves from destabilization by foreign capital flows, and their borrowers from foreign exchange risk.

Asian governments re-think foreign flows to domestic bond markets

Pity Indonesia. One year ago, the country was lauded for the openness of its domestic bond market.

In the months before Standard Poor’s upgraded it to investment grade status in May 2017, Indonesia’s domestic bond market was a magnet for foreign investors, attracted by the combination of the country’s high growth and high bond yields.

Today, Indonesia is experiencing the reverse phenomenon.

Rising US interest rates and contracting global...

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