THE HIMALAYAN TALK: PALASH BISWAS TALKS AGAINST CASTEIST HEGEMONY IN SOUTH ASIA

THE HIMALAYAN TALK: PALASH BISWAS TALKS AGAINST CASTEIST HEGEMONY IN SOUTH ASIA INDIA AGAINST ITS OWN INDIGENOUS PEOPLES

PalahBiswas On Unique Identity No1.mpg

Wednesday, February 19, 2014

Foreign investors bond with India, close in on $5.5-billion T-bill quota

Foreign investors bond with India, close in on $5.5-billion T-bill quota

Aparna Iyer | Mumbai | Updated: Feb 19 2014, 15:54 IST
SUMMARYAt the weekly auction on Tuesday, the cut-off yield on the 91-day Treasury bill was even higher at 9.11%.
At the weekly auction on Tuesday, the cut-off yield on the 91-day Treasury bill was even higher at 9.11%. Reuters

dian bonds are once again a favourite with foreign institutional investors (FIIs). The first 11 sessions of February have seen FIIs buy $1.6 billion worth of bonds, a strong run rate, data from the Securities and Exchange Board of India (Sebi) show. The purchases come on the back of a net $2 billion in January.

FIIs are, however, betting almost exclusively at the short end of the curve, snapping up high-yielding treasury bills; as on February 17, FIIs had exhausted 99% of the $5.5-billion investment limit in T-bills.

“Much of the money into the bond market appears to be coming into the short-term bonds and treasury bills,” Ananth Narayan G, head, global markets, Standard Chartered Bank, told FE.

The yield on treasury bills has been ruling at around 9% since January, while the yield on the most liquid benchmark 10-year 8.83%, 2023 government bond has been around 8.75% levels.

At the weekly auction on Tuesday, the cut-off yield on the 91-day Treasury bill was even higher at 9.11%. Equally important, the one-month offshore non-deliverable forward (NDF) dollar/rupee premium has dropped to levels of 20-30 paise over the last 45 days. “It’s a low-risk arbitrage trade and, therefore, it may continue as long as offshore hedging is conducive,” said Hitendra Dave, head, global markets, HSBC.

In the government bonds category, 76% of the $14.5-billion investment has been exhausted while in corporate bonds, FIIs hold a mere $14 billion out of the total available $51-billion limit.

The Reserve Bank of India (RBI) has been making efforts to encourage more long-term money into the bond market. In January, the central bank had increased the investment limit for long-term foreign investors in government bonds by $5 billion to $10 billion, effectively reduced the limit available for short-term investments by the same margin. Last week, the RBI reduced the sub-limit of FII investment into short-term commercial paper by $1.5 billion.


No comments:

Post a Comment

Related Posts Plugin for WordPress, Blogger...