FAR bonds lose their pull as tailwinds fade

Foreign inflows into Indian government securities through the Fully Accessible Route have moderated, with average daily inflows falling to around ₹500 crore from a peak of ₹14,034 crore on June 14. The slowdown is attributed to narrowing India-US yield spreads (down to 2-2.5% from 4-4.5%), delayed Bloomberg index inclusion decision, and rupee depreciation to 96.56 per dollar from 94.50-94.60 in mid-June. Since June 5, ₹53,289 crore has flowed into G-secs via the FAR route following RBI and government measures to attract foreign capital.