The Indian rupee has experienced substantial gains due to JPMorgan’s decision to include Indian bonds in its benchmark emerging-market index. This move has boosted investor confidence and is expected to have significant implications for India’s debt market and global investors.

The Indian rupee appreciated by 38 paise to reach 82.75 against the US dollar following the news of JPMorgan’s inclusion of Indian government bonds in its index.

This inclusion is expected to open the floodgates for increased foreign investment in India’s debt market, positively impacting the currency and onshore market growth.

Experts suggest that this development could push the rupee towards 82.50 in the near future, but its upside may be limited between the 83.25-83.30 zone due to RBI intervention.

JPMorgan’s decision is likely to attract substantial dollar flows, benefiting sectors such as banks, NBFCs, and leveraged companies.

India’s inclusion in the JPMorgan index will begin on June 28, 2024, with 1 percent increments in its index weighting, reaching a maximum weighting of 10 percent for India.

Hopes are raised for potential inclusion in the Bloomberg Global Aggregate Bonds Index, which could result in additional inflows of $15 billion to $20 billion.

This inclusion in a major global bond index is seen as a significant positive for India’s economy and currency.

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