Rising US Yields Threaten India’s Foreign Investment Appeal

US government bonds are becoming more attractive because they are offering higher returns.

Indian bonds usually offer investors extra returns compared with US bonds.

That extra return has now become much smaller.

Foreign investors may therefore decide that investing in India is less worthwhile, especially if the rupee loses value.

Some investors could move money out of Indian bonds and stocks.

Higher oil prices, geopolitical tensions and uncertainty about interest rates are adding pressure.

Indian policy measures have helped bring more stable money into the bond market.

These measures have also helped lower some longer-term Indian bond yields.

Economists still worry that attracting foreign money could remain difficult if current conditions continue.

Markets will watch US and Indian yields, the rupee and policy decisions closely.