FPI Outflows from G-sec FAR Hit 8-Month High in December

• Foreign portfolio investors (FPI) pulled out Rs 12,667.921 crore from government securities under the Fully Accessible Route (FAR) in December, marking an 8-month high.
• This outflow is the highest since May 2025 and follows a previous month of outflows, contrasting with October's inflows.
• Hardening bond yields, driven by dimming RBI rate cut expectations and rising Japanese bond yields, contributed to the increased outflows.
• FAR bonds, introduced in 2020, allow non-resident investors unrestricted access to India's government bond market.
• Future FPI inflows are anticipated, potentially driven by the inclusion of Indian bonds in the Bloomberg Global Aggregate Index from April 2026, expected to attract $20-25 billion.

Why It Matters: FPI outflows from G-sec FAR surged in December, but future inflows are expected with index inclusion.