MUMBAI, Feb 9 Reuters The Indian rupee39;s attractive carry relative to other Asian markets and muted volatility could lead to a pickup in dollar inflows into the debt market, supporting the local currency, analysts said.

Carry trades involve investors using a loweryielding currency to buy highyielding units.

The Reserve Bank of India39;s hawkish stance alongside the rate hike this week has lifted nearmaturity yields to the highest level in more than four years. The cutoff yield at Wednesday39;s Treasury bill auction rose to 7.06, the highest since Dec. 2018.

Following RBI39;s policy decision, analysts are now pencilling in one more rate hike in April.

Prospects for further rate hikes would support debt flows for frontend carry while the RBI39;s determination to bring inflation lower would support the mediumterm macro stability, BofA Securities said in a note.

India has attracted over 800 million in debt inflows thus far into the year, while equities recorded a net outflow of over 4 billion. In the December quarter, foreign investors took out about 400 million from India39;s debt market.

INR carry appears attractive relative to other markets in the region. We see scope for INR to benefit.., BofA said.

Taking the USDINR example, the rupee has a carry of 216 basis points in terms of the 364day India Treasury bill yield and 1year U.S. Treasury yield.

Compared to this, the carry on another Asian currency considered a high yielder, the Indonesian rupiah, is about…