Indian Reserves Hit Record As JPMorgan Index Date Approaches

Lina PortmanJune 7, 2024

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(Bloomberg) — India’s foreign exchange reserves hit a record $651.5 billion last week, as foreigners pile into its bonds ahead of their inclusion in the flagship emerging market debt index of JPMorgan Chase & Co..

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The figure cited by Reserve Bank of India Governor Shaktikanta Das while announcing the latest monetary policy decision on Friday represents an increase of $4.8 billion from the previous week, according to calculations from Bloomberg.

As global investors pour money into Indian debt before the Wall Street bank's index change takes effect on June 28, the RBI has sought to limit the rupee's volatility with interventions on the foreign exchange market. Purchases of dollars on the open market would increase reserves.

The pace of foreign flows into securities eligible for inclusion in the index, known as Fully Accessible Route Notes, accelerated late last month. The flood of money continued this week, with investors undeterred by the poor performance of Prime Minister Narendra Modi's party in the elections.

Despite this, the rupee barely moved against the dollar, compared to an appreciation of the won, baht and ringgit this month.

“We continue to view the rupee as a resilient currency among its emerging market peers, with the RBI set to limit large and disorderly depreciation biases,” said Jean Chia, global chief investment officer at the Bank of Singapore. “Maintaining the perception of macroeconomic and financial stability would be essential for the central bank at this stage.”