Data from the depositories show that such funds have exhausted 70% of the available $5 billion investment limit as of October 8; two months ago, only 45% of this limit had been used. On the back of such flows, the rupee has remained stable through the year, having gained 1.4% since January. On Thursday the rupee closed at 61.05 to the dollar.
With the quotas for gilts exhausted, foreign portfolio investors are lapping up high-yielding corporate bonds; around 47% of the the limit of $51 billion has been used up compared with just 40% two months ago. The improving macroeconomic data along with a stable government has seen India continue to attract dollars. Moreover, hedging costs have been coming off; the onshore three-month forward premium implied yield has fallen 20 basis points in the last one month.