Global funds are on the longest-buying streak of Indian sovereign bonds this year as a stronger rupee and a drop in currency-hedging costs boost demand.
They bought 120 billion rupees ($1.7 billion) of debt in the past eight trading days, data compiled by Bloomberg show. The purchases have been concentrated mostly in shorter-tenure bonds, traders say.
“The foreign interest largely seems to be in the short-end segment in 2022-25 maturities,” said Shailendra Jhingan, chief executive at ICICI Securities Primary Dealership Ltd. in Mumbai. “This could be driven by the currency view.”
A decline in volatility and optimism that the US and China will sign an initial trade pact have boosted emerging-markets assets. Onshore hedging costs, gauged by the rupee’s three-month forward-implied yields, dropped to 3.6% from as high as 4.5% in September.
(With inputs from LiveMint)