Rupee rises on JPMorgan index inclusion, posts weekly gain
rupee ended higher on Friday after JPMorgan announced it will include the country's government bonds in its emerging market index, which could lead to billions of dollars of inflows.
The rupee ended at 82.93 against the U.S. dollar, compared with 83.09 in the previous session.
The currency gained 0.3% this week even as the dollar index rose to an over 6-month high in Asia and was on track for its 10th consecutive weekly gain.
Importers' dollar purchases capped gains in the rupee after the currency opened at 82.8225 on Friday, traders said.
India's inclusion in JPMorgan's index will start on June 28, 2024, and extend over 10 months.
This is estimated to lead to inflows of $22 billion-$30 billion, according to analysts.
Passive inflows into Indian bonds could rise to as much as $50 billion over the next 12 months if other foreign indexes include Indian bonds, B. Prasanna, head of global markets at ICICI Bank, told Reuters.
Besides JPMorgan, FTSE Russell and Bloomberg-Barclays also have emerging bond indices and could consider including India.
«Some positive sentiment (from the inclusion) may persist next week,» said Dilip Parmar, a foreign exchange research analyst at HDFC Securities.
The FTSE Russell bond index review due on Sept.
28 will be closely watched, he added.
The rupee is likely to trade between 82.80 and 83.10 in the near-term, a foreign exchange trader at a state-run bank said, as higher U.S. Treasury yields and crude oil prices continue to pose downside risks.
Brent crude oil futures rose nearly 0.9% to $94.12 and have climbed 8% this month on supply concerns.
The 10-year U.S.
yield rose to a 16-year high of 4.50% in Asia trade.
Next week, investors will watch out for U.S. second-quarter GDP data and U.S.
