Indian Rupee's stability and low cost makes it attractive for carry trade, Bank of America says

The Indian rupee is stable and inexpensive compared to other emerging market currencies, making it attractive for carry traders, reports Bank of America Corp. A carry trade involves borrowing in a low-interest-rate currency and investing in a high-interest-rate currency for profit. \r

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David Hauner, head of global EM fixed-income strategy at Bank of America, highlights the rupee's low depreciation risk and minimal volatility, supported by the Reserve Bank of India's interest-rate pause and record foreign exchange reserves. Although the rupee offers lower yields than the Mexican peso or Turkish lira, its stability and resilient economic fundamentals make it favorable. \r

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The rupee has provided positive returns against the dollar in Asia this year, enhancing its carry trade appeal.