India’s forex reserves hit record high at $657 billion week after bond inclusion in JP Morgan EM index

India’s foreign exchange reserves touched an all-time high a week after the country’s sovereign debt was included in a key JPMorgan Chase & Co. emerging market index. The stockpile grew by $5.2 billion to $657.16 billion in the week of July 5, according to data released by the Reserve Bank of India.

 India is starting out with a 1% weightage on the key emerging market bond index, in a process that began on June 28. This will increase by a percentage point every month over ten months.

“RBI is intervening in the market due to inflows in equity and bonds because of the inclusion, it is one of the major reasons,” said Debendra Dash, a fixed income trader at AU Small Finance Bank in Mumbai. Another reason for the growth in forex reserves may be because of some valuation gain, he added.

Foreign investors have poured about $550 million into the country’s bonds in the July 5 week, according to Bloomberg-compiled data. Stocks saw about $1.1 billion of offshore inflows during the same period, as the country’s macro-stability burnishes its assets’ appeal for foreigners.