The Indian rupee’s plunge to a historic low prompted foreign investors to reevaluate their aggressive purchases of Indian assets, resulting in the largest sell-off of Indian bonds in a year. Global funds divested a net $425.3 million from rupee-denominated bonds on Friday, with a significant decline observed in index-eligible government bonds. Investors rushed to realign portfolios amid concerns about currency risk, despite the Reserve Bank of India’s efforts to stabilize the rupee’s value. The rupee’s stability, previously appealing to investors, may have left them vulnerable to unhedged positions, prompting a cautious approach amid heightened volatility. Foreign inflows into Indian debt, driven by their inclusion in global bond indexes, have contributed to the rupee’s resilience. Analysts anticipate the RBI to intervene to manage volatility, potentially allowing further appreciation of the USDINR pair before intervening heavily.