I see your pov but I don’t agree. Just like you expect funds to rise over time, I expect inr to weaken over time and that’s as given as you get interest. You could say I’m estimating the market risk exchange rate risk etc to be negligible compared to the return for non inr based assets. I’m also estimating the inflation risk/negative real yield risk to be higher in money market funds. I also believe those things aren’t priced in fully. As I said before, bonds are breaking multi year trendline:
if broken successfully it’s multi year structural shift So far bond interest rates have been in a downtrend for many decades. A few months above 7.5% is a structural shift for many years.
I don’t agree that the probability of inr moving both sides is equal or even comparable. But even if you have that opinion, what assets are you investing in for currency hedging? If inr appreciates, great. What if it goes the other way? If nothing else, SGB is the absolute minimum you can do to hedge against currency risk. It adds to the diversification element and against concentration risk of mm funds.