BOAML highlights potential for currency mismatches
Bank flags rising proportion of foreign-currency public debt issuance in Malaysia and Indonesia
Kuala Lumpur
BANK of America Merrill Lynch (BOAML) has flagged a rising proportion of foreign-currency public debt issuance in Malaysia and Indonesia and warned of implications for financial stability and macroeconomic policy given the potential for currency mismatches.
Currency misalignments - a key vulnerability that exacerbated the Asian financial crisis of 1997-98 starting with the attack on the Thai baht - appear to be re-emerging as governments are forced to opt for more foreign-currency debt financing because of a surge in local bond yields and diminishing foreign interest.
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