Bloomberg has the story here :
Global funds own 36 per cent of Malaysia’s bonds, 38 per cent of Indonesia’s
Ringgit, rupiah two most volatile Southeast Asian currencies
The popularity of Malaysia’s ringgit and Indonesia’s rupiah among global investors has made them Southeast Asia’s most volatile currencies, just as the region heads for troubled waters.
Already reeling from a commodity slump, debt in the two nations is seen by strategists as the most vulnerable to concerns surrounding the U.S. presidential election and the Federal Reserve’s next interest-rate increase.
One-month implied volatility in the ringgit, a measure of expected moves in the exchange rate used to price options, is the highest in Southeast Asia at 8.9 percent, while the rupiah is second at 7.3 percent.
“Because so many foreign investors are already long Malaysian and Indonesian local-currency government bonds, these risk positions will be reduced, mostly through currency hedging,” said Maximillian Lin, a currency strategist at UBS Group AG in Singapore.
“The rush to hedge under such circumstances usually sees further pressure for a currency to weaken.”
