Indian five hundred rupee banknotes are arranged for a photograph in Mumbai, India. (Photographer: Dhiraj Singh/Bloomberg)

Rupee Tumble Snuffs Out Japan's Love for India Uridashi Debt

(Bloomberg) -- Indian bonds used to get a lot of love from Japanese individual investors only a few years ago. But the passion has faded due to a plunge in the rupee and concern about election-related chaos.

The amount of uridashi bonds sold in rupees fell to 1 percent of all sales of such debt so far this year, lowering its ranking to No. 8, Bloomberg-compiled data show. That compared with 1.6 percent last year, the sixth highest, and 2.6 percent in 2017. The proportion rose to an all-time high of 4.3 percent in 2016.

Rupee Tumble Snuffs Out Japan's Love for India Uridashi Debt

Bond investors in Japan are turned off by the tumble in the rupee, which has dropped 6.1 percent in the past year against the yen, the worst performer among Asian currencies. Projections show the Indian currency’s fall will continue until the end of 2021. Prime Minister Narendra Modi announced an expansionary budget earlier this month in his final attempt to woo voters as investors are concerned his re-election bid may fall after at least three pre-poll surveys indicated that his Bharatiya Janata Party won’t get a majority later in the year.

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