Foreign Investors Pour Into Indian Bonds as RBI Supports Rupee

Foreign investors dramatically increased their purchases of Indian government bonds last week, buying 55.51 billion rupees ($631 million) — a 46-fold jump from the previous week’s 1.21 billion rupees, according to Clearing Corporation of India Ltd. data. The surge comes as the Reserve Bank of India (RBI) actively intervened to support the rupee, which had been under speculative pressure. The currency rose nearly 1% last Wednesday following RBI actions, signaling growing market confidence.

Rupee-denominated bonds have benefitted from both the RBI’s intervention and attractive yields. The benchmark 10-year yield stands around 6.5%, among the highest in the region, drawing investors seeking high returns alongside potential currency gains. Experts note that a stronger rupee and high yields make Indian debt particularly appealing, with returns on local bonds outperforming broader emerging-market debt so far in October.

Despite the positive momentum, analysts caution that sentiment could shift if trade tensions resurface or central bank support wanes. However, with easing inflation, potential monetary easing, and supportive real rates, India’s bond market remains an attractive destination for foreign investors seeking yield and diversification, particularly if the rupee stabilizes against regional currencies.

Pic Courtesy: google/ images are subject to copyright