The Indian rupee is set to rise on Friday after India’s inclusion in JPMorgan’s emerging market bond index, with non-deliverable forwards indicating an opening rate of around 82.80-82.82 compared to the previous day’s 83.09. This is expected to bring in billions of dollars in inflows.
- Indian government bonds will be included in the Government Bond Index-Emerging Markets index and the index suite, with inclusion starting on June 28, 2024, and extending over ten months.
- The index inclusion could result in inflows of around $24 billion into eligible government bonds from the start of next year to May 2025.
- India’s inclusion in the JPMorgan index also increases the likelihood of inclusion in the Bloomberg Global Aggregate Bonds Index, which could lead to additional inflows of $15 billion to $20 billion.
- However, the rupee is expected to face challenges from rising long-term US Treasury yields, with the 10-year yield hitting its highest level since 2007, at 4.50%.
- The hawkish stance from the Fed is supporting the dollar, with the dollar index reaching 105.74, the highest in over six months.