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Economic Times
7 days ago
- Business
- Economic Times
Resurgence of India rate-cut wagers revives foreign investor interest in bonds
Foreign investors are showing renewed interest in Indian government bonds, driven by expectations of an upcoming rate cut by the Reserve Bank of India as early as August. Subdued inflation and persistent growth concerns are fueling these expectations. Over the past month, foreign investors have net purchased 129 billion rupees in Indian bonds. Tired of too many ads? Remove Ads Tired of too many ads? Remove Ads Foreign appetite for Indian government bonds is back, with inflows picking up steadily over the last month, as investors gauge fresh expectations of a rate cut by the Reserve Bank of India as early as RBI cut rates by a larger-than-expected 50 basis points in June and changed the stance to "neutral", prompting investors to bet on a prolonged a sharp drop in June retail inflation has some investors reassessing the likelihood of another rate RBI could implement a modest 25 basis point cut in August if inflation remains subdued and growth concerns persist, said Singapore-based Manish Bhargava, CEO of Straits Investment Management, adding that bond yields are attractive at current the last one month, foreign investors have net bought 129 billion rupees ($1.5 billion) of Indian bonds linked to global indexes after selling more than 330 billion rupees in the first two-and-a-half months of the financial year that started on April 1, clearing house data said concerns on the growth front are also likely to prompt the central bank to lower rates recent high-frequency data disappointing and indicating the possibility of a further slowdown in growth, "there is potential for more support from the RBI further down the line," said London-based Giulia Pellegrini, lead portfolio manager, emerging market debt at overall economic fundamentals remain solid, keeping the country on investors' radar, she said.A wider gap between interest rates in India and the U.S. would add to the appeal of Indian debt, investors why a Federal Reserve rate cut could act as a positive catalyst for Indian bonds, as they have historically helped local currency debt markets, said Nigel Foo, Singapore-based head of Asian fixed income at First Sentier current Indian bond yields are lower than where they were in the past at similar policy rate levels, and so are relatively unattractive, he 10-year U.S. yield was around 4.35%, with the Fed expected to cut rates by at least 50 bps in 2025. The Indian 10-year benchmark bond yield was at 6.30%."India's local debt story remains very compelling on both FX and rates," said Jean‑Charles Sambor, head of emerging markets debt at TT International Asset Management in London, who expects bond yields to decline through this year and next, and finds the middle of the yield curve attractive.($1 = 86.2470 Indian rupees)
Reuters
22-07-2025
- Business
- Reuters
Resurgence of India rate-cut wagers revives foreign investor interest in bonds
MUMBAI, July 22 (Reuters) - Foreign appetite for Indian government bonds is back, with inflows picking up steadily over the last month, as investors gauge fresh expectations of a rate cut by the Reserve Bank of India as early as August. The RBI cut rates by a larger-than-expected 50 basis points in June and changed the stance to "neutral", prompting investors to bet on a prolonged pause. But a sharp drop in June retail inflation has some investors reassessing the likelihood of another rate cut. The RBI could implement a modest 25 basis point cut in August if inflation remains subdued and growth concerns persist, said Singapore-based Manish Bhargava, CEO of Straits Investment Management, adding that bond yields are attractive at current levels. Over the last one month, foreign investors have net bought 129 billion rupees ($1.5 billion) of Indian bonds linked to global indexes after selling more than 330 billion rupees in the first two-and-a-half months of the financial year that started on April 1, clearing house data showed. Analysts said concerns on the growth front are also likely to prompt the central bank to lower rates further. With recent high-frequency data disappointing and indicating the possibility of a further slowdown in growth, "there is potential for more support from the RBI further down the line," said London-based Giulia Pellegrini, lead portfolio manager, emerging market debt at AllianzGI. India's overall economic fundamentals remain solid, keeping the country on investors' radar, she said. A wider gap between interest rates in India and the U.S. would add to the appeal of Indian debt, investors said. That's why a Federal Reserve rate cut could act as a positive catalyst for Indian bonds, as they have historically helped local currency debt markets, said Nigel Foo, Singapore-based head of Asian fixed income at First Sentier Investors. However, current Indian bond yields are lower than where they were in the past at similar policy rate levels, and so are relatively unattractive, he added. The 10-year U.S. yield was around 4.35%, with the Fed expected to cut rates by at least 50 bps in 2025. The Indian 10-year benchmark bond yield was at 6.30%. "India's local debt story remains very compelling on both FX and rates," said Jean‑Charles Sambor, head of emerging markets debt at TT International Asset Management in London, who expects bond yields to decline through this year and next, and finds the middle of the yield curve attractive. ($1 = 86.2470 Indian rupees)
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Business Standard
24-04-2025
- Business
- Business Standard
Forex, interest rate traders turn cautious after Pahalgam terror attack
India's foreign exchange and interest rate traders have turned cautious on fears of a possible escalation in tensions between New Delhi and Islamabad following a deadly militant attack in India's Kashmir region. Suspected militants killed 26 men at a tourist destination in Kashmir on Tuesday in the worst attack on civilians in the country in nearly two decades. Indian Foreign Secretary Vikram Misri said that there was cross-border involvement in the attack. New Delhi has suspended a six-decade old river-sharing treaty and closed the only land crossing between the nuclear-armed rivals. A day after the attack, the Indian rupee recorded its worst performance in two weeks. The currency continued to weaken on Thursday, falling to 85.6625 against the US dollar. Worries about New Delhi's response to the attack are leading to some unease, according to three bankers. The Kashmir attack has played a role in the rupee's weakness, coupled with the recovery in the dollar index, a senior treasury official at a bank said. However, it is difficult to quantify the exact impact of each factor on the rupee's decline, said the banker, who asked not to be identified as he is not permitted to speak to media. Dollar/rupee forward premiums rose alongside the rupee's decline. Indian bonds fell and interest rate swaps hardened. While the size of the moves "is not big by any measure", it reflects the uncertainty on what could unfold next, a forex and swap trader at a bank said. India's 5-year overnight index swap rate has risen 12 basis points from Wednesday's low, while the 1-year OIS is up by about half that amount. Meanwhile, the 10-year India benchmark bond yield climbed to 6.36 per cent on Wednesday and held near that level on Thursday. Alok Sharma, head of treasury at ICBC, anticipates the 10-year yield will stay above 6.30 per cent because of the caution following the attack. This sentiment is driving "more paying interest" in OIS and forward premiums, he said. Kashmir has been at the heart of India-Pakistan animosity for decades and the site of multiple wars, insurgency and diplomatic standoffs. The market was "reacting to uncertainty, not fundamentals," Manish Bhargava, CEO of Straits Investment Management, said. "The path forward depends on how the situation unfolds."
Time of India
24-04-2025
- Business
- Time of India
India's forex, interest rate traders turn cautious after Kashmir attack
India's foreign exchange and interest rate traders have turned cautious on fears of a possible escalation in tensions between New Delhi and Islamabad following a deadly militant attack in India's Kashmir region. Suspected militants killed 26 men at a tourist destination in Kashmir on Tuesday in the worst attack on civilians in the country in nearly two decades. Indian Foreign Secretary Vikram Misri said that there was cross-border involvement in the attack. by Taboola by Taboola Sponsored Links Sponsored Links Promoted Links Promoted Links You May Like Play War Thunder now for free War Thunder Play Now Undo New Delhi has suspended a six-decade old river-sharing treaty and closed the only land crossing between the nuclear-armed rivals. A day after the attack, the Indian rupee recorded its worst performance in two weeks. The currency continued to weaken on Thursday, falling to 85.6625 against the U.S. dollar. Worries about New Delhi's response to the attack are leading to some unease, according to three bankers. Live Events The Kashmir attack has played a role in the rupee's weakness, coupled with the recovery in the dollar index, a senior treasury official at a bank said. However, it is difficult to quantify the exact impact of each factor on the rupee's decline, said the banker, who asked not to be identified as he is not permitted to speak to media. Dollar/rupee forward premiums rose alongside the rupee's decline. Indian bonds fell and interest rate swaps hardened. While the size of the moves "is not big by any measure", it reflects the uncertainty on what could unfold next, a forex and swap trader at a bank said. India's 5-year overnight index swap rate has risen 12 basis points from Wednesday's low, while the 1-year OIS is up by about half that amount. Meanwhile, the 10-year India benchmark bond yield climbed to 6.36% on Wednesday and held near that level on Thursday. Alok Sharma, head of treasury at ICBC, anticipates the 10-year yield will stay above 6.30% because of the caution following the attack. This sentiment is driving "more paying interest" in OIS and forward premiums, he said. Kashmir has been at the heart of India-Pakistan animosity for decades and the site of multiple wars, insurgency and diplomatic standoffs. The market was "reacting to uncertainty, not fundamentals," Manish Bhargava, CEO of Straits Investment Management, said. "The path forward depends on how the situation unfolds."
Economic Times
24-04-2025
- Business
- Economic Times
India's forex, interest rate traders turn cautious after Kashmir attack
Following a deadly militant attack in Kashmir, India's financial markets are experiencing unease. The rupee weakened, bond yields climbed to 6.36%, and interest rate swaps hardened as traders grew cautious. New Delhi's response, including suspending a river treaty and closing a land crossing with Pakistan, fuels uncertainty. Tired of too many ads? Remove Ads Tired of too many ads? Remove Ads India's foreign exchange and interest rate traders have turned cautious on fears of a possible escalation in tensions between New Delhi and Islamabad following a deadly militant attack in India's Kashmir militants killed 26 men at a tourist destination in Kashmir on Tuesday in the worst attack on civilians in the country in nearly two decades. Indian Foreign Secretary Vikram Misri said that there was cross-border involvement in the Delhi has suspended a six-decade old river-sharing treaty and closed the only land crossing between the nuclear-armed rivals.A day after the attack, the Indian rupee recorded its worst performance in two weeks. The currency continued to weaken on Thursday, falling to 85.6625 against the U.S. about New Delhi's response to the attack are leading to some unease, according to three Kashmir attack has played a role in the rupee's weakness, coupled with the recovery in the dollar index, a senior treasury official at a bank it is difficult to quantify the exact impact of each factor on the rupee's decline, said the banker, who asked not to be identified as he is not permitted to speak to forward premiums rose alongside the rupee's decline. Indian bonds fell and interest rate swaps the size of the moves "is not big by any measure", it reflects the uncertainty on what could unfold next, a forex and swap trader at a bank 5-year overnight index swap rate has risen 12 basis points from Wednesday's low, while the 1-year OIS is up by about half that amount. Meanwhile, the 10-year India benchmark bond yield climbed to 6.36% on Wednesday and held near that level on Sharma, head of treasury at ICBC, anticipates the 10-year yield will stay above 6.30% because of the caution following the attack. This sentiment is driving "more paying interest" in OIS and forward premiums, he has been at the heart of India-Pakistan animosity for decades and the site of multiple wars, insurgency and diplomatic market was "reacting to uncertainty, not fundamentals," Manish Bhargava, CEO of Straits Investment Management, said."The path forward depends on how the situation unfolds."
