Follows inclusion of India’s bonds in JP Morgan emerging market bond index
MUMBAI: Foreign investments in local bonds have surpassed $1 billion so far in July following the inclusion of India’s bonds in JP Morgan Chase & Co’s flagship emerging market bond index late last month, according to reports. This has increased local rupee liquidity, as the central bank absorbed the inflows to boost reserves. The RBI added $9.7 billion to its reserves that week, the data showed.
India’s banking system liquidity has shifted to a surplus after being in deficit for most of the year, due to government spending post-elections and the central bank’s actions. Excess liquidity that banks deposit with the central bank stood at 1.4 trillion rupees, according to a Bloomberg Economics index.
