Indonesia USD Denominated Bonds Gain Popularity On Rupiah Fall

Indonesian dollar bonds are beating rupiah debt as investors seek to tap the country’s long-term growth potential without the risk of holding assets in the worst-performing emerging-market currency.

Global notes gained 7 percent since the start of September, after losing 18 percent in August in the worst performance since 2008, according to indexes compiled by HSBC Holdings Plc. That exceeded the 4.3 percent advance in local securities, which snapped a four-month decline. The rupiah fell for a seventh month in September, losing 5.7 percent, the most among 24 emerging-market currencies tracked by Bloomberg.

Kokusai Asset Management Co. says the dollar bonds will enable investors to cushion themselves against the rupiah, the most volatile currency in Asia, while UOB Asset Management Ltd. said it favors the foreign-currency notes. Inflation slowed last month from a three-year high in August and the country’s trade balance returned to surplus for the first time in five months following a record deficit in July, data showed last week.


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Mingze Wu

Mingze Wu

Currency Analyst at Market Pulse
Based in Singapore, Mingze Wu focuses on trading strategies and technical and fundamental analysis of major currency pairs. He has extensive trading experience across different asset classes and is well-versed in global market fundamentals. In addition to contributing articles to MarketPulseFX, Mingze centers on forex and macro-economic trends impacting the Asia Pacific region.
Mingze Wu