Indonesia has just lifted its benchmark interest rate
by 50 basis points to 7 per cent as its efforts to ease the battering meted out
on the rupiah by retreating emerging markets investors intensifies.
Bank Indonesia was not scheduled to hold a monetary
policy meeting until September 12, having left the cost of borrowing on hold in
August. But it brought forward the meeting as the fall in the rupiah
intensified, taking its year-to-date loss against the US dollar to 12 per cent
– a four-year low.
The prospect of the beginning of the end of stimulus
measures in the US has hit emerging market currencies in nations with
significant current account deficits. Emerging markets had been in vogue during
the cheap money era as investors chased the higher yields on offer.
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