Asia Pacific

FX Volatility Constrains Funding for Underleveraged Indonesian Banks

Despite a series of measures introduced by the Indonesian authorities, including six benchmark rate hikes in a year and improved hedging tools, the rupiah has continued to suffer from souring sentiment towards emerging markets. As a result, local banks and corporates are facing increasingly limited funding opportunities, even as Indonesia’s bond market expands at record pace following the sovereign’s upgrade to investment grade in 2017.