Indian Investors Turn to US Treasuries Amid High Yields, Weak Rupee — SkimNews
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- US 10-year Treasury yield touched 5.37% earlier in October, the highest since 2002, before easing to 4.97%, increasing the appeal of US debt for Indian investors.
- Rupee depreciated 8.38% against the US dollar over the 12 months to 23 October, amplifying returns in rupee terms for investments in US Treasuries.
- Indian mutual funds investing in US Treasuries manage only about ₹400 crore, with most closed to fresh inflows due to the $7 billion overseas investment cap.
- Nirav Karkera of W by Groww recommends allocating 5-15% of a debt portfolio to US Treasuries, favoring shorter maturities to limit interest-rate risk.
- Viram Shah of Vested Finance notes around 5% of the platform’s Indian investors have exposure to US debt, citing diversification and future dollar spending needs as key drivers.
- Liberalised Remittance Scheme (LRS) allows Indian residents to remit up to $250,000 annually, making it a practical route for investing in US Treasury ETFs despite TCS and tax-compliance requirements.
Why it matters: Indian investors face a narrowing yield gap between domestic and US bonds, while the rupee’s depreciation adds a currency boost—making even modest allocations to short-duration US Treasuries a strategic hedge. With most mutual fund routes saturated, the LRS becomes a critical channel, though tax and estate implications complicate access.
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