The Indian rupee opened with little change compared to its closing rate on Wednesday, which stood at 83.22 per dollar. Today’s focus is primarily on developments in the dent and forex markets, as FTSE Russell is expected to make a crucial decision regarding the inclusion of Indian bonds in the FTSE Emerging Markets Government Bond Index.
To prevent the Indian currency from potentially reaching a historic low, the Reserve Bank of India (RBI) is reportedly considering selling US dollars in the open market at levels ranging from 83.22 to 83.25 rupees per dollar, as reported by Reuters, citing input from seven traders.
Furthermore, Reuters reported that the RBI may have already supplied dollars in the non-deliverable forward market before the spot market opened, according to information from five traders. Meanwhile, on September 28, Indian government bond yields experienced an increase, with the 10-year benchmark 7.18% 2033 bond yield trading at 7.20% as of 10 am, according to Reuters data.
It’s worth noting that the FTSE Emerging Markets Government Bond Index – Capped (EMGBI-Capped) oversees total assets under management (AUM) of $1,477 billion as of the end of August, making it more than six times larger than JPM GBI-EM GD. SBI Research, in a recent report, suggested that if the inclusion process with JPM GBI-GM stabilizes significantly, there could be another even more substantial inclusion by mid-2025.
However, not all experts share the same level of optimism. According to Barclays, India’s prospects for inclusion in other major bond indices, such as the Bloomberg Global Aggregate Index and the FTSE Russell World Government Bond Index, appear low. These indices require euroclear-ability for settlement and a higher sovereign credit rating, which India does not seem to be close to achieving, as stated in a report by Barclays in September.
