Foreign funds flee India's bonds just when it needs them the most

Foreign funds have slashed their holdings of India’s government bonds to the lowest in three years amid dwindling returns, just as the nation embarks on a huge borrowing plan.

The amount of sovereign securities held by global funds has slumped Rs 76,700 crore ($10 billion) from this year’s peak in February as steep hedging costs diminished pay-offs in one of Asia’s highest-yielding markets. The rupee’s plunge by about 6 per cent in 2020 further reduced the appeal of Indian debt.

“While the dollar cost of funding has come