India has the most room for easing among emerging Asian nations after Bank Indonesia’s surprise decision to lower its benchmark rate.
Just take a look at inflation-adjusted policy rates of emerging Asian countries. India, which lowered rates this month, has the most scope to cut interest rates further, followed by Thailand. After Wednesday’s move, Indonesia’s has fallen to less than 1 percent. More easing could be good news for Asia’s bond markets. Excluding China and the Philippines, they have lured a net $11.6 billion this quarter, data compiled by Bloomberg show.
“Investors like India’s high yield and growth potential, so a rate cut won’t be so negative in terms of fund flows,” said Koji Fukaya, chief executive officer at FPG Securities Co. in Tokyo. “Thailand’s real yield looks to be high but the nation’s absolute yield and inflation are both too low, so all in all, India looks more attractive.”
— With assistance by Yumi Teso
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