Business
JPMorgan's decision to include India in its emerging market debt indext pushes rupee, bond prices higher
The inclusion of Indian government bonds in JPMorgan's widely tracked emerging market debt index could possibly drive inflow of of billions of dollars into India
FP Staff Last Updated:September 22, 2023 11:02:28 IST 
Representative image. Reuters
JPMorgan Chase & Co. has announced its decision to include Indian government bonds in its benchmark emerging-market index starting 28 June 2024.
According to JPMorgan, India’s local bonds will be included in the Government Bond Index-Emerging Markets (GBI-EM) index and the index suite, benchmarked by about $236 billion in global funds.
The inclusion could possibly drive the inflow of billions of dollars into India, which is now the world’s fifth-largest economy.
“India is expected to reach the maximum weight of 10 per cent in the GBI-EM Global Diversified Index (GBI-EM GD), JPMorgan said in a statement.
JPMorgan Chase & Co. further informed that currently, 23 Indian government bonds (IGBs) with a combined notional value of US$ 330 billion are index-eligible.
“Inclusion of the IGBs will be staggered over a 10-month period starting 28 June, 204, through 31 March 2025 (i.e., the inclusion of 1 per cent weight per month)” the statement by JPMorgan read.
Rupee, bond reacts to announcement
Post announcement, Indian rupee and 10-year bond prices jumped on Friday. At 9.10 am, the INR was trading at 82.87 a dollar, up 0.26 per cent from its previous close of 83.09. The domestic currency opened at 82.83.
The 7.18 per cent 2033 Government Bond yield opened at 7.08 per cent versus Thursday’s close of 7.14 per cent. On Thursday, the rupee depreciated marginally to end 2 paise lower at 83.09.
The dollar index, which measures the US currency’s strength against major currencies, was trading 0.12 per cent up from its previous close at 105.48.
In August this year, Morgan Stanley had estimated that Indian bonds could be included in two out of the three global bond indexes, including a JPMorgan developing market gauge, driving inflows to the tune of nearly $40 billion.
