INSUBCONTINENT EXCLUSIVE:
bonds easier could help lift the pressure on the rupee and arrest rising bond yields, traders and investors said.
The local currency may now
"The authorities are trying to address the CAD while improving dollar flows to finance the same.
To address issue of expanding current
account deficit or excess of overseas spending over revenues, the government will also take necessary steps to cut down non-essential
imports while focussing more on exports, Mr Jaitley said
The rupee has now fallen about 12% this year forcing the government to undertake emergency measures to rein in imports and increase foreign
fund flows.
The government also proposed yesterday to remove exposure limits of upto 20% of an FPI bond portfolio to a single corporate
group, and 50% to a single company
RBI tightened foreign bond purchases in April this year in an attempt to restrict the flow of hot money into Indian markets
But this ended up creating confusion among foreign bankers who help overseas clients to buy domestic paper.
Overseas investors can invest in
Indian corporate bonds up to Rs 2.67 lakh crore in a year
Last year, investors used up the limit to about 80-90% but that figure has now dropped to just 76% as global investors shied away from
Withholding tax now at 5% is seen as a drag hindering easy issuance of masala bonds.
With the latest relaxtion in masala bonds, it will help
getting more dollars flows aiding Domestic Borrowers- of which those NBFCs are a key component," said Ajay Marwaha, director for investments
at Sun Global Investments in London
Withholding tax removal, coupled with emerging stability in the INR will ensure masala bonds regain momentum as a key financing instrument
finance minister Arun Jaitley said
Masala Bonds, the RBI the government appear to be encouraging domestic entities and foreign investors to bet on the rupee, and bring in
