Modi and rupee's fate in lockstep? $730-bn sovereign bond market is worried

ING Bank NV has lowered its year-end forecast for rupee to 76.50 -- the most bearish in a Bloomberg survey -- citing political uncertainty ahead of state elections in December

One of India’s largest debt underwriter says the rupee, Asia’s worst-performing currency this year, is a bigger worry for the $730 billion sovereign bond market than a miss by the government on its budget deficit target.

With the US Federal Reserve expected to continue its tightening cycle and key elections due in India later this year and next, global funds may not be keen to put money to work in the nation’s assets, Shailendra Jhingan, chief executive at ICICI Securities Primary Dealership, said in an interview.

“A pick up in foreign outflows in equity and debt markets amid a strong dollar in