Foreign investors pull ₹5,109 crore from govt bonds in 3 days amid global uncertainty

Foreign portfolio investors (FPI) withdrew nearly ₹5,109 crore from government securities under the fully accessible route in the past three days due to global uncertainty. Under the fully accessible route, overseas investors can freely buy and sell certain government securities without any limit. As of September 15, FPI investment in government securities under FAR was ₹366,806.286 crore, compared to ₹371,915.496 crore on September 9 and ₹371,520.751 crore on September 10.

The investment had dropped to ₹366,791.286 crore on September 11, according to data from the Clearing Corporation of India (CCIL). Notable selling by FPIs occurred in G-Secs under the FAR route. Factors such as elevated crude prices around $110 due to the worsening US-Iran war situation, US Treasury yields approaching 5%, and the weakening rupee have made Indian sovereign debt less appealing to foreign portfolio investors, as explained by Mataprasad Pandey, vice president at Choice Wealth.

Brent crude oil prices rose to $107.41 per barrel due to concerns about global supply disruptions following attacks on Saudi Arabia's East-West pipeline and postponed Gulf Arab states-Iran talks. The yield on the benchmark 10-year US Treasury note surpassed 5% for the first time since 2023, triggered by heightened oil prices and a sell-off in government bonds globally.

Rising interest rates in advanced economies have made their financial assets more attractive to global investors, leading to capital outflows from emerging markets. The Indian rupee depreciated by 42 paise to 95.96 against the US dollar, driven by heightened tensions in the Middle East and a depreciating local currency.