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Rupiah’s Carry Trade Nemesis to Become Its Savior This Quarter

  • Overseas investors are eyeing Indonesia’s high bond yields
  • Currency advance has already exceeded Bank Indonesia estimate
Indonesian Rupiah, Indian Rupee And Filippino Peso As Gloom Lifting From Asia's Emerging Currencies After Rate Hikes
Photographer: Brent Lewin/Bloomberg

Carry trades that dragged Indonesia’s rupiah to the bottom of Asia’s league table in the first quarter are now poised to support its remarkable rebound.

The currency surged six times more than its closest regional rival in April, erasing half its drop over the previous three months. There may be more gains to come as global funds are enticed back into Indonesian bonds, the highest yielding in Asia.