• Language
  • App
  • Subscriptions
  • Specials
  • Sign-In
  • Register
GeStepAhead Realasset Realasset
moneycontrol.com

Home » News » Markets » Market Cues

Apr 11, 2013, 10.08 AM | Source: Reuters

Why foreign investors may be selling Indian debt

The heavy foreign selling by foreign institutional investors over the past five sessions - amounting to a net USD 1 billion - may have more to do with the broad rise in USD/INR forward premiums than fundamental reasons, according to three analysts.

Like this story, share it with millions of investors on M3

Why foreign investors may be selling Indian debt

The heavy foreign selling by foreign institutional investors over the past five sessions - amounting to a net USD 1 billion - may have more to do with the broad rise in USD/INR forward premiums than fundamental reasons, according to three analysts.

Post Your Comments

Share Cancel

Why foreign investors may be selling Indian debt
The heavy foreign selling by foreign institutional investors over the past five sessions - amounting to a net USD 1 billion - may have more to do with the broad rise in USD/INR forward premiums than fundamental reasons, according to three analysts.

Foreign investors are suspected to have been especially heavy sellers in treasury bills, these analysts said, probably because the yields may no longer justify the higher funding costs from rising currency forward premium costs.

The 3-month USD/INR forward is currently trading at 7.58 percent at a time when the 91-day t-bill yield has come down.

The cutoff for the 91-day t-bill came in at 7.8102 percent at Wednesday's auction, lower than the 7.8519 percent last week.

However, a fall in USD/INR forward premiums could stop the selling, according to these analysts.

"I think you will see a reversal of these trades because forwards have started drifting down. So you will not see further sell-offs," said Manish Wadhawan, director and head of interest rates at HSBC in Mumbai.

The 1-year forward premium rose to an over 14-year high at 380.50 points on Tuesday, but has eased on Wednesday to 370.50 points.

Also Read: Sensex rallies 188 as IT, banks surge; Rel Comm gains 13%

Ads by Google

Buy, Hold, Sell ? Hear it first on M3
Why foreign investors may be selling Indian debt

See all

Get started using your favorite social network

or

Login using moneycontrol ID

Username
Password

Need help logging in? Reset password.

Don´t have an account? Sign Up

Get started using your favorite social network

or

Simply sign up using this short form

* mandatory

UserName*

Username should be atleast 4 character

Password*

Password should be 8 or more characters,
atleast 1 number, 1 symbol & 1 upper case letter

Alert

Your Password should contain
  • 8 or more characters
  • At least 1 number
  • At least 1 symbol
  • At least 1 upper case letter
Confirm Password*
Email
Already have an account? Login