<p>Mumbai: The Reserve Ban of India's (RBI) recent curbs on foreign investors buying longer-duration government bonds have made no dent in their appetite for such paper and instead, their overall purchases have risen 21 per cent on-month since the restrictions.</p><p>At the end of July, the RBI said all fresh issuances of 14-year and 30-year bonds would no longer be eligible for purchases by foreign investors under the Fully Accessible Route (FAR).</p>.RBI permits foreign investors in IFSC to invest in sovereign green bonds.<p>This was expected to create "uncertainty" among foreign investors, said Chandresh Jain, Asia rate and FX strategist, global markets at BNP Paribas.</p><p>"But foreign inflow into bonds is still continuing which shows no big macro view change from those investors."</p><p>They net bought bonds under FAR worth 207.4 billion rupees ($2.47 billion) in one month to Aug 29, compared with 171 billion rupees in the previous one-month period.</p><p>Surprisingly, purchases of 10-year-plus bonds stayed around 44 billion rupees in July and August, indicating the worries were overblown, analysts said.</p>.RBI cautions public against fraudulent activities in its name.<p>"We continue to hold a positive view towards overall INR bonds as fundamental factors are still quite robust ... (and) are generally more bullish on the 10-year part versus the longer-end," said Yifei Ding, a portfolio manager at Invesco.</p><p>"After an initial hiccup from clients, inflows have continued into other liquid papers as we are heading into the rate-easing cycle," a senior trader with a foreign bank said, requesting anonymity.</p><p>Overall, foreign buying of FAR bonds has crossed $15 billion since last September when JPMorgan said it would include Indian debt in its emerging market index.</p><p>Of that, $4.5 billion, nearly a third, has come after the inclusion on June 28. And about 25 per cent of that has been into the benchmark 2034 bond, which remains the most favoured security.</p><p>Bank of America anticipates another $15 billion of flows by March when India's weightage in the index reaches 10 per cent, from 3 per cent at end-August.</p><p>BNP Paribas will continue to pitch long positions, said Jain, as India's low core inflation, high real rates, improving fiscal deficit and stable foreign exchange favour bonds. </p>
<p>Mumbai: The Reserve Ban of India's (RBI) recent curbs on foreign investors buying longer-duration government bonds have made no dent in their appetite for such paper and instead, their overall purchases have risen 21 per cent on-month since the restrictions.</p><p>At the end of July, the RBI said all fresh issuances of 14-year and 30-year bonds would no longer be eligible for purchases by foreign investors under the Fully Accessible Route (FAR).</p>.RBI permits foreign investors in IFSC to invest in sovereign green bonds.<p>This was expected to create "uncertainty" among foreign investors, said Chandresh Jain, Asia rate and FX strategist, global markets at BNP Paribas.</p><p>"But foreign inflow into bonds is still continuing which shows no big macro view change from those investors."</p><p>They net bought bonds under FAR worth 207.4 billion rupees ($2.47 billion) in one month to Aug 29, compared with 171 billion rupees in the previous one-month period.</p><p>Surprisingly, purchases of 10-year-plus bonds stayed around 44 billion rupees in July and August, indicating the worries were overblown, analysts said.</p>.RBI cautions public against fraudulent activities in its name.<p>"We continue to hold a positive view towards overall INR bonds as fundamental factors are still quite robust ... (and) are generally more bullish on the 10-year part versus the longer-end," said Yifei Ding, a portfolio manager at Invesco.</p><p>"After an initial hiccup from clients, inflows have continued into other liquid papers as we are heading into the rate-easing cycle," a senior trader with a foreign bank said, requesting anonymity.</p><p>Overall, foreign buying of FAR bonds has crossed $15 billion since last September when JPMorgan said it would include Indian debt in its emerging market index.</p><p>Of that, $4.5 billion, nearly a third, has come after the inclusion on June 28. And about 25 per cent of that has been into the benchmark 2034 bond, which remains the most favoured security.</p><p>Bank of America anticipates another $15 billion of flows by March when India's weightage in the index reaches 10 per cent, from 3 per cent at end-August.</p><p>BNP Paribas will continue to pitch long positions, said Jain, as India's low core inflation, high real rates, improving fiscal deficit and stable foreign exchange favour bonds. </p>