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Last week, there was a significant increase in foreign investments in Indian government bonds that are qualified for index inclusion. This indicates that the measures taken by the central bank to restrict these securities have had minimal impact on investor confidence.
According to data from the Clearing Corp. of India, offshore investors purchased Rs 90.9 billion ($1.1 billion) worth of fully accessible route bonds in the week ending on August 2nd. This is an increase from the previous week's total of Rs 27.6 billion.
Despite the Reserve Bank of India's unexpected decision to limit access to new Indian government bonds with tenures of 14 years and 30 years, the inflows continued. Indian authorities are expressing apprehension regarding the substantial influx of speculative capital, amounting to billions of dollars, which is linked to the inclusion of its debt in a crucial global index.
India's weight on JPMorgan Chase & Co.'s developing market index has increased from 1 percent to 2 percent since its introduction in June, resulting in increased flows. India's weight in the gauge will gradually increase by 1 percent each month until it reaches a total of 10 percent.
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