Indian debt funds set to extend $4.5 billion bond selloff after RBI policy shift

Indian debt funds are expected to continue selling government bonds, with a total of $4.5 billion already sold since July. This shift is a result of the Reserve Bank of India's decision to raise interest rates for the first time in nearly four years, indicating further increases. The move is causing fund managers to reassess their portfolios and opt for shorter-term assets to minimize risks associated with rising bond yields. This trend may impact the market for long-term bonds, which have seen yields reach nearly three-year highs.

Why it matters

The Reserve Bank of India's policy shift has changed rate expectations, prompting Indian mutual funds to sell government bonds. This selling pressure is likely to continue, affecting bond prices.

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