Foreign inflows into Indian bonds will hit a decade-high of $2 billion around June 28, when they will be included in a widely-tracked JPMorgan index, although the central bank will lap up most of the dollars to avoid a knee-jerk rise in the rupee, bankers said.

The $2 billion, single-day inflow estimate by four bankers trails only the record-high $2.7 billion poured into Indian bonds on Aug. 20, 2014, as prospects of a credit rating upgrade gained traction.

More than $200 billion in assets track the JPMorgan Emerging Market Index in which India will eventually have a weight of 10% by March 2025, suggesting total passive inflows of at least $20 billion over the 10-month period.

The Reserve Bank of India, which has been keeping a hawk eye on the rupee to prevent it from plumbing lifetime lows, will be vigilant of the inflows and speculative positioning on the currency, but has not adopted additional surveillance measures, a source aware of the RBI’s plans said.

Source: CNBC