BackFTSE Russell Indian inclusion: Rupee, bond yields in focus ahead of decision today
Rupee stable, forex market in focus as FTSE Russell considers inclusion of Indian bonds in index. RBI may sell dollars to prevent record low.
PremiumRupee opened flat versus Wednesday's closing of 83.22 per dollar. Dent and forex market are in focus today as FTSE Russell will make a decision today on inclusion of Indian bonds on the FTSE Emerging Markets Government Bond Index.
Earlier, FTSE Russell had kept India on watchlist
The Reserve Bank of India may be selling US dollars in open market at around 83.22-83.25 rupee levels to prevent the Indian currency from heading towards a record low, reported Reuters quoting seven traders.
“The Reserve Bank of India also likely supplied dollars in the non-deliverable forward market before the spot market opened, five traders said," reported Reuters.
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Meanwhile, Indian government's bond yields gained on September 28 as 10-year benchmark 7.18% 2033 bond yield was trading at 7.20% at 10 am, according to Reuters data.
“Incidentally, the FTSE Emerging Markets Government Bond Index - Capped (EMGBI-Capped) oversaw total funds (AUM) of $1,477 billion as on end August, making it 6-times plus larger than JPM GBI-EM GD!! If the inclusion process at JPM GBI-GM materially stabilizes, we can see another BIGGER inclusion by mid-2025," said SBI Research in a recent report.
Meanwhile, not all experts are optimistic.
“India's prospects for getting into other major bond indices, namely the Bloomberg Global Aggregate Index and the FTSE Russell World Government Bond Index, remain low, in our view, as they need euroclear-ability for settlement and a higher sovereign credit rating, which India does not appear close to," Barclays had said in a report in September.
Earlier this month, JPMorgan said it will include Indian government bonds in its widely tracked emerging market debt index. This inclusion is likely to prompt billions of dollars of inflows into the world's fifth-largest economy.
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