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.

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 liquidity have prompted foreign capital outflows across emerging markets. In Indonesia, this trend has been exacerbated by concerns that the Jokowi administration is tolerating fiscal slippage in the run up to a general and presidential...

¬ Haymarket Media Limited. All rights reserved.

FinanceAsia has updated its subscription model.

Registered readers now have the opportunity to read 5 articles from our award-winning website for free.

To obtain unlimited access to our award-winning exclusive news and analysis, we offer subscription packages, including single user, team (2-10 users), or office-wide licences.

To help you and your colleagues access our proprietary content, please contact us at subscriptions@financeasia.com, or +(852) 2122 5222

Article limit is reached.

Hello! You have used up all of your free articles on FinanceAsia.

To obtain unlimited access to our award-winning exclusive news and analysis, we offer subscription packages, including single user, team (2-10 users), or office-wide licences. To help you and your colleagues access our proprietary content, please contact us at subscriptions@financeasia.com, or +(852) 2122 5222