Due to a declining rupee and indications that the central bank is nearing the end of its cycle of interest rate cuts, Indian government bonds that are eligible for inclusion in international indices are expected to see a record monthly outflow.
According to data from the Clearing Corporation of India, global funds have already sold $1.6 billion worth of bonds in December.
That represents the largest outflow since the creation of the so-called Fully Accessible Route in 2020, a structure that exempts some government bonds from restrictions on foreign investment. According to Standard Chartered Plc, outflows might persist in the upcoming months.
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Due to substantial state debt issuance, the withdrawals are putting pressure on Indian bonds, which are expected to see their…
