Exchange rates drive Indonesian government bond yields, impacting investor returns.
Investors consider bond yields when buying bonds. A study analyzed how bond prices, interest rates, inflation, and exchange rates affect Indonesian government bond yields over 10 and 30 years. Bond prices had a negative impact on yields, while interest rates and exchange rates had positive effects. Inflation did not significantly affect bond yields. Exchange rates had the biggest impact on medium-term bond yields, while bond prices had the biggest impact on long-term bond yields.