--- title: "Global Bond Sell-Off Intensifies Capital Outflows from Asia; Indonesian, Philippine, and Indian Currencies Hit Historic Lows" type: "News" locale: "en" url: "https://longbridge.com/en/news/286890171.md" description: "The global bond sell-off has pushed US Treasury yields above 5%, driving capital to accelerate its return to dollar-denominated assets. The Indonesian rupiah, Philippine peso, and Indian rupee have all fallen to historic lows. Rising energy import costs are further squeezing current accounts, forcing the central banks of these three countries to make difficult trade-offs between raising interest rates to stabilize exchange rates and preserving economic growth, rapidly narrowing their policy space" datetime: "2026-05-19T09:59:00.000Z" locales: - [zh-CN](https://longbridge.com/zh-CN/news/286890171.md) - [en](https://longbridge.com/en/news/286890171.md) - [zh-HK](https://longbridge.com/zh-HK/news/286890171.md) --- # Global Bond Sell-Off Intensifies Capital Outflows from Asia; Indonesian, Philippine, and Indian Currencies Hit Historic Lows The severe volatility in the global bond market is transmitting to Asian emerging economies, with currencies in countries such as Indonesia, the Philippines, and India under continuous pressure. Specifically, the Indonesian rupiah's exchange rate against the US dollar touched IDR 17,728 per USD today, refreshing a historic low. The Indian rupee hovered near 96.3 per USD, close to its historic low, while the Philippine peso continued to linger at low levels after hitting a new low last Friday. **The sustained rise in US Treasury yields is the primary source of this round of pressure.** The current yield on 30-year US Treasuries has broken through 5%, approaching highs not seen since 2007, driving global capital back into dollar-denominated assets. In the bond market, the Bloomberg Philippines Bond Index (USD-denominated) has cumulatively fallen 13% year-to-date, ranking last among emerging Asian markets. With local currencies under continuous pressure, central banks in these countries are forced to make difficult trade-offs between stabilizing exchange rates and protecting growth. The market expects the Bank Indonesia may raise interest rates this week, while the Philippines is also discussing the possibility of larger or even unconventional rate hikes. Meanwhile, tensions in Iran have pushed up oil prices, further increasing inflation and external financing pressures for these energy-importing nations. With dual pressures on current accounts and price stability, policy response space is rapidly narrowing. Frederic Neumann, Chief Asia Economist at HSBC, pointed out that **as growth prospects weaken and inflationary pressures rise, central banks across many Asian countries are facing increasingly tricky policy dilemmas.** ## Surge in US Treasury Yields Puts Pressure on Asian Currencies High oil prices and inflation concerns are pushing global sovereign bond yields to multi-year highs, and the turmoil in the US Treasury market is quickly transmitting to Asian emerging currency markets. **Since the escalation of tensions in Iran, major Asian currencies have generally weakened, with the exception of the renminbi; the Philippine peso, Indian rupee, and Indonesian rupiah have seen the largest declines.** **As US long-term interest rates climb and the US dollar strengthens, the attractiveness of emerging market assets declines, while the repayment pressure on US dollar debt rises simultaneously.** Meanwhile, to stabilize exchange rates, central banks often have to raise interest rates or increase foreign exchange intervention, which further compresses already fragile economic growth space. However, policy buffers are being rapidly depleted. Sanjay Mathur, Chief Economist for Southeast Asia and India at ANZ, pointed out that as foreign exchange reserves continue to decline and the pressure from high energy prices remains unabated, large-scale intervention will become increasingly difficult to sustain. ANZ expects that by 2026, the current account deficits of India, Indonesia, and the Philippines will be equivalent to 1.9%, 1.1%, and 4% of their respective GDPs. Rob Subbaraman, Chief Economist at Nomura Holdings, warned that **when global financing conditions tighten, risk premiums could rise sharply in a short period; even seemingly adequate foreign exchange reserves could be quickly exhausted, and rising living costs could further amplify social and political risks.** ## Rate Hike by Bank Indonesia Imminent; Fiscal Expansion Raises Investor Concerns Currently, the Indonesian rupiah has fallen to a historic low. The market widely expects that Bank Indonesia will announce an interest rate hike this Wednesday and continue to stabilize the exchange rate through foreign exchange intervention. At the same time, Bank Indonesia has adopted a strategy of buying long-term government bonds and selling short-term government bonds to suppress long-end yields and enhance the attractiveness of local bonds. This approach is similar to the "Operation Twist" it implemented in 2022 when global financing costs soared. However, **the market believes that rate hikes can only alleviate short-term pressure and are unlikely to fundamentally reverse the weakness of the Indonesian rupiah.** Jason Tuvey, Deputy Chief Emerging Markets Economist at Capital Economics, stated that even with rate hikes, they can only buy the Indonesian rupiah a brief respite; to truly stabilize market confidence, the key lies in returning fiscal policy to prudence. Investor concerns are mainly focused on the large-scale fiscal spending plan promoted by President Prabowo Subianto, including his signature free meal program. **These policies have heightened market concerns about widening fiscal deficits, rising debt, and the outlook for sovereign credit ratings.** ## The Philippines and India: Two Dilemmas Under Energy Shocks **The Philippines is one of the economies most severely impacted by global energy shortages, while also facing the drag of domestic political turmoil.** Vice President Sara Duterte is embroiled in an impeachment case, accused of embezzling public funds. Economic data is equally bleak: the oil price shock has dragged Philippine GDP growth to its lowest level since 2009 (excluding the pandemic period), with the inflation rate breaking through 7%, far exceeding the central bank's target range of 2%-4%. Facing continuous pressure on the peso, traders and economists are paying increasing attention to the possibility of significant or even unconventional rate hikes. The Philippine government rejected all bids in a government bond auction on Tuesday in an attempt to curb soaring yields. In contrast, **India is primarily responding to pressure through foreign exchange intervention and trade protectionist measures, including implementing stricter controls on gold and silver imports.** The rupee has fallen to a historic low against the US dollar. Economists point out that similar measures may spread across Southeast Asia, especially against the backdrop of continuously rising food prices. Indian Prime Minister Modi is relatively stable politically but still faces multiple pressures: he needs to balance infrastructure investment with social welfare spending, while coping with the impact of rising oil prices on the fiscal deficit and inflation. ### Related Stocks - [EPHE.US](https://longbridge.com/en/quote/EPHE.US.md) - [EIDO.US](https://longbridge.com/en/quote/EIDO.US.md) - [INDA.US](https://longbridge.com/en/quote/INDA.US.md) - [00005.HK](https://longbridge.com/en/quote/00005.HK.md) - [HSBC.US](https://longbridge.com/en/quote/HSBC.US.md) - [ANZ.AU](https://longbridge.com/en/quote/ANZ.AU.md) - [8604.JP](https://longbridge.com/en/quote/8604.JP.md) - [NMR.US](https://longbridge.com/en/quote/NMR.US.md) - [DTIW.SG](https://longbridge.com/en/quote/DTIW.SG.md) - [HSBA.UK](https://longbridge.com/en/quote/HSBA.UK.md) - [ANZGY.US](https://longbridge.com/en/quote/ANZGY.US.md) ## Related News & Research - [Philippines raises $489 mln from T-bond offer](https://longbridge.com/en/news/286037525.md) - [EXPLAINER-How Philippine Vice President Sara Duterte's impeachment could proceed](https://longbridge.com/en/news/286063779.md) - [Philippines will 'definitely' comply with ICC request to arrest senator, minister says](https://longbridge.com/en/news/286531491.md) - [Philippine Senator says arrest is imminent, urges public not to allow ICC transfer](https://longbridge.com/en/news/286234239.md) - [Philippines to convene court for VP impeachment amid political turmoil](https://longbridge.com/en/news/286693506.md)