Rupee's weak outlook was maintained by Nomura

Mumbai: The government is expecting the inclusion of Indian bonds in JP Morgan's benchmark emerging market index to strengthen the rupee, while research firm Nomura has predicted a weak outlook for the rupee. JP Morgan has decided to include Indian government bonds or government securities in its benchmark emerging market index from June 2024 announced.

There is no need to assume that inclusion in the index will lead to volatility in the currency market, said Chief Economic Adviser V Ananth Nageswaran while speaking to reporters last week. The inclusion of bonds in the index is also likely to strengthen the Indian rupee.

In a report prepared by Nomura, the outlook for the Indian rupee is expected to remain weak.

After the JP Morgan announcement, the rupee strengthened against the dollar and was seen at the level of Rs 82.80. However, this rally did not last long and the rupee has now tumbled to 83.14 per dollar.

Actual inflows from passive funds are unlikely to start before June 28, 2024. From this date the bonds will be included in the index. Inflows may be less. Some money managers have already allocated an average of two to three percent.

Nomura has maintained a bearish outlook on the rupee despite the possibility of a widening of India's current account deficit and the risk of equity outflows. A ban on rice exports is likely to widen India's current account deficit.