Why debt investors in Asia should be wary
Indonesia and India face structural obstacles to economic growth from the double whammy of weaker currencies and high oil prices. Lack of fuel subsidy reform is holding both back.
The recent growth in oil prices has revealed why fuel subsidies in Indonesia and India are a structural obstacle to economic growth. Until they are resolved, fund managers say debt investors in Asia should be wary.
Asian bond investors who have watched the market sell-off since May (see chart, below) will have anxiously followed the accompanying weakening of local currencies against the dollar. (One dollar now buys you 26% more Indian rupees and 12% more Indonesian rupiah than it …
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