What if unwinding rupee carry positions spike India's onshore funding costs and forward premia?
An unwind of rupee carry positions and hedged FPI debt flows spikes onshore funding costs and forward premia, straining Indian banks reliant on swap-funded dollar liquidity.
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The butterfly cascade
How this trigger trickles across markets, left → right — the root shock, its first‑order moves, then the ripple effects. Drag any node; tap a market for its real price history.
Resolution timeline — how this probability is moving
Our model's odds (electric blue) over time vs the market's (Polymarket, amber), from the past toward the 6–18 months horizon. Each dot is a real macro event that nudged the probability — green pushed it up, red pushed it down. Tap a dot for the source. Loading the probability audit trail…
What it would mean
If this plays out, it is a risk-off shock. An unwind of rupee carry positions and hedged FPI debt flows spikes onshore funding costs and forward premia, straining Indian banks reliant on swap-funded dollar liquidity. The trigger decomposes into signed root‑shocks — EM currencies ▼ · FX carry appetite ▼ · Financial conditions ▲ · Risk appetite ▼ — which propagate through our causal graph to the markets below.