Societe Generale strategists report that recent RBI steps to attract foreign portfolio investors are already easing Indian bond yields, with the five‑year segment outperforming. Foreign banks have bought about $2 billion of government bonds since June 5, while higher USD deposit rates echo the 2013 swap window, suggesting a policy tilt toward encouraging Dollar inflows over rate hikes or FX intervention.

Yields fall as inflows accelerate

"In India, the RBI’s measures announced last week to woo FPIs are already showing results, with bonds rallying and yields falling across the curve."

"From Friday through Tuesday, benchmark yields eased ~10 bps, while the five-year yield slid nearly 30 bps amid improved sentiment and inflows."

"Foreign banks have net bought about $2bn of Indian government bonds since June 5."

"Separately, Indian banks are offering 6%–7.1% on 5-year USD deposits—mirroring the 2013 swap window that drew $34 bn, highlighting a broader shift toward attracting dollar inflows rather than relying on rate hikes or FX intervention."

"That said, inflation and FX reserves data due tomorrow may carry less weight as RBI measures play out."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)