The Lemon Fool

I have a possibly flawed theory, and I'd appreciate some patient views.

Looking long term, the exchange rate to the Indian Rupee looks to be stabilising; finding a range.

The Indian Government Gilts yield 7% and maybe worth investment.

Does anyone have a view on the wisdom of this line of thinking?

Actually HOW one goes about buying these gilts, is an enigma wrapped inside a mystery.... and any pointers would be very much appreciated.

Joe

Joewads wrote:Actually HOW one goes about buying these gilts, is an enigma wrapped inside a mystery.... and any pointers would be very much appreciated.

I think there are regulatory, currency control and political factors which prevent you from buying these instruments. If you look at EM debt ETFs (eg iShares EM local debt) these have excluded Indian government debt to date.

However it appears that change may be in the air. JP Morgan has announced that Indian government debt will be included in its EM bond index from June 2024. I doubt you will be able to buy Indian government bonds as a private individual for some time (unless you are an NRI or PIO) but maybe an ETF may be offered in the future?

More info here: (paywall but can probably be 'got around' by clearing cookies etc)
https://www.bloomberg.com/news/articles ... bt-economy

The attraction of government bonds is their relative safety, commensurate with lower returns than other investments. So Indian bonds are yielding 7%/year now. An exchange rate can change by 7% in a few months, even with major currencies, and be disadvantageous by 14% for years; there goes 2 years worth of return. Conventional wisdom says currency hedge foreign bonds, although the idea is worth challenging. Ditto the notion you can predict currency future rates - forget it.