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Economic Times
a day ago
- Business
- Economic Times
Rupee gains 14 paise on Trump hint of no Iran action for now, equity flows
The Indian rupee edged higher to 86.58 per dollar on Friday, marking its first gain in six sessions, fueled by inflows into domestic equities. This appreciation occurred despite high crude oil prices and ongoing tensions between Israel and Iran. Market sentiment was buoyed by signals from US President Trump suggesting a delay in action against Iran. Tired of too many ads? Remove Ads Tired of too many ads? Remove Ads The Indian rupee modestly strengthened Friday, its first advance in six days tracking inflows into domestic equities, to close at 86.58 per dollar. The rupee climbed 14 paise despite volatile oil prices and no immediate signs of a truce in the Israel-Iran strength in the rupee came after US President Donald Trump signalled to avoid any precipitate action on Iran. Rebalancing of the FTSE Russell index also led to some flows, traders said. The rupee traded between 86.54 and 86.67 to the dollar on Friday. Brent crude oil prices remained elevated at $77 per barrel, while the dollar index was at 98. A rise in crude oil prices is detrimental to inflation in India as the country is a large importer of the commodity. "Chances of rupee strengthening are very low while crude oil prices are this high. The gain we have seen today is all because of Trump's comments to postpone strikes on Iran," said Anil Bhansali, head of treasury at Finrex Treasury Reserve Bank of India was likely absent today and did not intervene, traders said."The rebalancing flows of the FTSE Russell Index did help, but dollar demand was strong too, which countered the inflow," a trader said. Foreign investors bought Indian equities worth ₹7,940.7 crore on Friday."The only positive we have seen is that FPIs are not large sellers in Indian equities," Bhansali said.
Economic Times
01-05-2025
- Business
- Economic Times
Overseas investors pull Rs 13,359 crore from Indian bonds amid US yield surge and geopolitical tensions
Mumbai: Net sales of Indian bonds by overseas investors surged the highest in April since the inclusion of local debt on global bond indices, reflecting the undiminished allure of higher returns in the US, and the impact of escalating tensions with Pakistan toward the latter half of the month, market experts said. ADVERTISEMENT Reversing four months of inflows, April saw a net ₹13,359 crore of outflow from the index-eligible fully accessible route (FAR) government securities, the highest monthly exit since India's inclusion in the JP Morgan EM index in July 2024, CCIL data showed. Passive investments often closely track the weightings on global gauges. "In the first half of this month, dollar yields were volatile amid speculation about the potential dismissal of the Fed chair and retaliatory tariffs, leading to the expectations that dollar yields could skyrocket," said Nitin Agarwal, head of trading at ANZ Banking Group. "The second half of the month has been dominated by escalating geopolitical tensions, prompting investors to go bearish on Indian bonds." Local bonds are now part of three global indices-the JP Morgan emerging market index, the FTSE Russell index, and the Bloomberg Emerging Market local currency government had turned negative in October and November last year, before picking up net cumulative flow under the FAR route was ₹8,919 crore from July 2024 to April 2025. Over the same period, the investment in equities via the FII route saw outflows worth ₹1,15,125 crore, according to NSDL data. ADVERTISEMENT Around mid-April, yields on the 10-year US treasury bill shot up to 4.5%, within just a few days, from 3.9% on April 10, while the 30-year yield spiked at almost 5%, London Stock Exchange Group data contrast, Indian bond yields have trended lower despite geopolitical concerns, narrowing the difference with the US yields. ADVERTISEMENT The benchmark 10-year yield has dropped to 6.36% as of April 30, from 6.53% on April 2, CCIL data showed. Stability Hunt ADVERTISEMENT "At the end of the day, emerging markets like India thrive in periods of stability, which has not been the case lately," Agarwal funds are underweight on Indian bonds even as Indian debt reached their full 10% weight in the JP Morgan EM index in April. "In terms of the weights on the JP Morgan index, we are at 10%. But there are some funds who are not at that 10% weight, partly because of operational reasons and partly because they may be slow to build their India positions," saif Nathan Sribalasundaram, Asia EM rates strategist, Nomura. ADVERTISEMENT Along with the requirement of margins to be posted and extension of trading hours, the fund registration also remains a cumbersome process, Nick Gendron, global head, fixed income index product, Bloomberg Index Services had told ET in January. (You can now subscribe to our ETMarkets WhatsApp channel)
