Samvat 2080: Start of a new year signals better prospects for bonds, rupee

Foreign inflows expected after index inclusion; rate cuts on the horizon

Participants in the bond and foreign exchange (forex) markets are optimistic about Samvat 2080, anticipating significant foreign inflows due to the inclusion of government bonds in JPMorgan’s emerging market (EM) bond index and potential interest rate reductions by central banks.

JPMorgan announced India’s inclusion in its widely followed EM bond index on September 22, specifically in its flagship JPMorgan GBI (Government Bond Index)-EM. The inclusion will be gradual over 10 months, with a 1 per cent weight added each month until March 31, 2025.

Approximately $30 billion in inflows are expected into the government bond market following this inclusion. Market