Rupee, rising yields driving foreign portfolio investors away

In February, FPIs sold $421 mn in debt; in March they have sold $133 mn so far

Foreign investors have slowly started liquidating some of their holdings in local debt paper, as rising bond yields and the rupee's weakening bias make their investment not lucrative enough at a time when the US economy shows early signs of recovery.

It is not that they are liquidating en masse; utilisation of their permitted limits show there is very little space left to invest. And, this is also a threat for local investors. In February, foreign portfolio investors (FPIs) sold $421 million in debt; in March so far, they have sold $133 mn. However, in January, they had bought $1.5 billion