Asia FX: Indonesia, Philippines and India under pressure – BNY
BNYs Bob Savage highlights growing stress across emerging Asian assets as higher U.S. yields, a stronger Dollar and Oil shock weigh on Indonesia, the Philippines and India. IDR has hit record lows amid downgrades and index removals, while EM bonds face rising inflation and funding costs. Policymakers respond with FX intervention and bond support, but vulnerabilities remain elevated. Record-low IDR and broader EM strain “Indonesia, the Philippines and India are facing mounting financial vulnerabilities as the global bond selloff and Iran war oil shock intensify pressure on already-fragile emerging Asian economies. Rising U.S. Treasury yields and a stronger dollar are fueling capital outflows, weakening regional currencies and increasing pressure on central banks to tighten monetary policy even as growth slows.” “IDR has hit fresh record lows, which will pose a test for the BI tomorrow: equities are down again, while 10y bonds are stable, holding near 6.76%. Both Moodys and Fitch have downgraded Indonesian bonds, warning about new government policy shifts. IDR has shed 14% of its value since President Prabowo Subianto took office in October 2024.” “MSCI has removed six Indonesian companies from its index and dropped another 13 from its small cap index. Politics matters more than natural resources in some nations.” “The