It’s no surprise that India and Indonesia are among the worst-hit Asian currencies this year when you look at their foreign debt exposure and the level of reserves they have to cover that.
Moody’s Investors Service’s external vulnerability index — which is the ratio of short-term debt, maturing long-term debt and non-resident deposits over one year calculated as a proportion of reserves — puts Indonesia at 51 percent and India at 74 percent.
Malaysia and the Philippines are the odd ones out: the ringgit has gained this year even though Malaysia is among the most debt risky in Asia, while the Philippines has low foreign exposure but a currency that’s the second worst-performer in Asia, down almost 5 percent against the dollar.
Tighter global financial conditions is making it more expensive to refinance foreign debt and adds to pressure on currencies. In some countries, including Indonesia and the Philippines, yields have risen, Moody’s said. However, the extent of depreciation and more generally, tightening in financing conditions, is nowhere similar in magnitude compared with the taper tantrum in 2013, it said.