That dynamic started changing as massive borrowings by the government to fund pandemic-recovery stimulus spurred Bank Indonesia to take the unusual step of monetizing debt. Offshore holdings of the nation’s bonds dropped to 29% this month, the lowest since 2012, from as high as 39% at the start of the year, according to data compiled by Bloomberg.
Indonesia’s bond and currency markets, risk benchmarks that tend to move in tandem, are diverging in signs that the nation’s pandemic response is deterring global funds.
The rupiah is the worst-performing Asian currency this quarter while the nation’s benchmark sovereign bond is outperforming peers. The two markets are usually aligned due to heavy foreign debt holdings.
