FX.co ★ India 10Y Yield Rises as Index Inclusion Delayed

The yield on India’s 10-year government security hovered around 6.84%, inching higher after the previous session’s losses, as sentiment stayed weak in the wake of Bloomberg’s decision to postpone adding Indian government bonds to its Global Aggregate Index. The move disappointed investors, many of whom had treated index inclusion as almost a given, and it prompted foreign investors to sell nearly $600 million of bonds under the Fully Accessible Route (FAR) over the last six sessions, marking the largest weekly outflow in four months.

Despite the recent pullback, overseas investors remained net buyers of $3.9 billion in FAR-eligible bonds between June 1 and July 31. Market participants also turned their attention to this week’s Reserve Bank of India policy meeting, where economists widely expect rates to remain on hold, while watching closely for the central bank’s assessment of inflation risks stemming from higher oil prices and a weak monsoon.