The rupee opened stronger on Friday as the inclusion of Indian government bonds in the JPMorgan emerging markets index began.
The local currency appreciated by 7 paise to close at Rs 83.39 against the greenback. It opened at Rs 83.40, according to Bloomberg. It had closed at Rs 83.46 on Thursday.
JPMorgan Chase & Co. had announced a landmark decision to include the domestic gilts in its benchmark emerging market index on June 28. Since then, global funds have poured $11 billion into the domestic debt market.
India is predicted to have the maximum weight of 10% in the index. With an inclusion of 1% weight per month, the addition of the gilts will be staggered over a 10-month period, starting June 28 through March 31, 2025. The inclusion is expected to bring in upwards of $20 billion of foreign investments over the next few months. Currently, 23 Indian government bonds with a total nominal value of $330 billion are index-qualified.
Calling it a "golden day for India", Anil Bhansali, executive director at Finrex Treasury Advisors LLP, expects that exporters would wait to sell dollars, while importers would buy dollars at the dips.
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