Foreign Bond Exits Drive India Yields to Two-Year Highs
India's forex curbs prompted foreign investors to exit government bonds, pushing yields to a two-year high. Outflows reached 222 billion rupees since March.
Foreign exchange restrictions implemented by the central bank of India have triggered a significant withdrawal by overseas investors from the domestic government bond market. This exodus has fueled a selling cycle that pushed borrowing costs to their highest levels in two years, according to a senior official at the Nuvama Group.
The tightening of foreign exchange trading rules occurred between late March and early April. These measures were intended to stabilize the rupee, which hit record lows as geopolitical tensions involving Iran drove up the price of Brent Crude Oil. The rising energy costs threatened the economic growth and inflation outlook for the net oil-importing nation.
