Question 1

Scenario A: Escalation?

Accepted Answer

Scenario Analysis Scenario A (Escalation) — 50% * Chain: India's central bank implements additional measures to support the rupee (e.g., increased intervention in currency markets, targeted bond issuance). This encourages foreign investors to increase their holdings of Indian debt instruments, leading to a sustained surge in inflows. * Confirmation indicators: 1) Increased volume and frequency of Indian Rupee purchases by foreign central banks. 2) A significant rise in the cost of borrowing for India's government (e.g., higher yields on sovereign bonds). * Time horizon: 3-6 months Scenario B (Status Quo) — 38% * Chain: The current measures announced by the Indian authorities to boost foreign bond inflows remain in place, with no further significant policy changes. * Confirmation indicators: 1) Continued inflow of foreign capital into India's index-el (32% model probability, not a guarantee)

Question 2

Scenario B: Status Quo?

Accepted Answer

Scenario Analysis Scenario A (Escalation) — 50% * Chain: India's central bank implements additional measures to support the rupee (e.g., increased intervention in currency markets, targeted bond issuance). This encourages foreign investors to increase their holdings of Indian debt instruments, leading to a sustained surge in inflows. * Confirmation indicators: 1) Increased volume and frequency of Indian Rupee purchases by foreign central banks. 2) A significant rise in the cost of borrowing for India's government (e.g., higher yields on sovereign bonds). * Time horizon: 3-6 months Scenario B (Status Quo) — 38% * Chain: The current measures announced by the Indian authorities to boost foreign bond inflows remain in place, with no further significant policy changes. * Confirmation indicators: 1) Continued inflow of foreign capital into India's index-el (50% model probability, not a guarantee)

Question 3

Scenario C: De-escalation?

Accepted Answer

Scenario Analysis Scenario A (Escalation) — 50% * Chain: India's central bank implements additional measures to support the rupee (e.g., increased intervention in currency markets, targeted bond issuance). This encourages foreign investors to increase their holdings of Indian debt instruments, leading to a sustained surge in inflows. * Confirmation indicators: 1) Increased volume and frequency of Indian Rupee purchases by foreign central banks. 2) A significant rise in the cost of borrowing for India's government (e.g., higher yields on sovereign bonds). * Time horizon: 3-6 months Scenario B (Status Quo) — 38% * Chain: The current measures announced by the Indian authorities to boost foreign bond inflows remain in place, with no further significant policy changes. * Confirmation indicators: 1) Continued inflow of foreign capital into India's index-el (18% model probability, not a guarantee)