Nifty99000 100%

Sensex99000 100%

Article rating: 3.7
Article rating: 5.0
Article rating: 4.0
Article rating: No rating
Article rating: 1.5
Article rating: No rating
Article rating: No rating
Article rating: No rating
Article rating: No rating
Article rating: No rating
Article rating: No rating
Article rating: No rating
Article rating: 4.7
Article rating: 4.0
Article rating: 4.2
Article rating: No rating


Will the RBI issue NRI bonds like 2013?

Author: Bharat Sunnam/Wednesday, August 29, 2018/Categories: Currency

Will the RBI issue NRI bonds like 2013?

At a time when the rupee hovers around the 70-mark against the dollar, a clamour for NRI bonds has grown.

In the summer of 2013, the Reserve Bank of India (RBI) had launched NRI bonds and garnered $30 billion to curb the rupee weakness.

Analysts favouring issuing of NRI bonds claim the widening current account deficit, caused by higher imports over exports, can be bridged with dollar inflows from foreign nationals in the form of business capital. Arguing further, analysts state that foreign portfolio investors (FPI) have offloaded nearly Rs 39,000 crore in 2018 till 26 August.

However, the current scenario is a complete contrast of the economic situation in 2013. The RBI currently holds more than $400 billion in its foreign reserves, much higher than the levels in 2013. More importantly, unlike the domestic political situation in 2013, the recent weakness in the rupee is majorly caused by global geo-political factors including the rise in crude oil prices.

The current account deficit (CAD) currently at 2.4 per cent is expected to reach 2.5 per cent in FY19, while in 2013 the CAD had breached 4.8 per cent of GDP.

Though the probability is less, the RBI could also encourage exports by providing sops to curb the situation.

Meanwhile, about $222 billion of short-term external debt will be maturing by March 2019, strengthening the case for the RBI to release NRI bonds. Short term external debt maturing by March 2019 is almost 55.4 per cent of the current forex reserves, slightly lower than the levels of 2013 when it was 60 per cent.

To prevent the rupee from sinking further, the RBI should clarify to the market its plans to get dollar inflows to repay the external debt.

The author is a fundamental research analyst at Karvy Forex and Currencies Pvt Ltd

Print Rate this article:

Number of views (769)/Comments (0)

rajyashree guha

Bharat Sunnam

Other posts by Bharat Sunnam
Contact author

Leave a comment

Add comment



Ask the Finapolis.

I'm not a robot
Dharmendra Satpathy
Col. Sanjeev Govila (retd)
Hum Fauji Investments
The Finapolis' expert answers your queries on investments, taxation and personal finance. Want advice? Submit your Question above
Want to Invest



The technical studies / analysis discussed here can be at odds with our fundamental views / analysis. The information and views presented in this report are prepared by Karvy Consultants Limited. The information contained herein is based on our analysis and upon sources that we consider reliable. We, however, do not vouch for the accuracy or the completeness thereof. This material is for personal information and we are not responsible for any loss incurred based upon it. The investments discussed or recommended in this report may not be suitable for all investors. Investors must make their own investment decisions based on their specific investment objectives and financial position and using such independent advice, as they believe necessary. While acting upon any information or analysis mentioned in this report, investors may please note that neither Karvy nor Karvy Consultants nor any person connected with any associate companies of Karvy accepts any liability arising from the use of this information and views mentioned in this document. The author, directors and other employees of Karvy and its affiliates may hold long or short positions in the above mentioned companies from time to time. Every employee of Karvy and its associate companies is required to disclose his/her individual stock holdings and details of trades, if any, that they undertake. The team rendering corporate analysis and investment recommendations are restricted in purchasing/selling of shares or other securities till such a time this recommendation has either been displayed or has been forwarded to clients of Karvy. All employees are further restricted to place orders only through Karvy Consultants Ltd. This report is intended for a restricted audience and we are not soliciting any action based on it. Neither the information nor any opinion expressed herein constitutes an offer or an invitation to make an offer, to buy or sell any securities, or any options, futures or other derivatives related to such securities.

Subscribe For Free

Get the e-paper free