INR: G-Sec limits increase can accommodate inflow surge - ANZ

Khoon Goh, analyst at ANZ, notes that in India, the Reserve Bank of India (RBI) has announced that Foreign Portfolio Investor (FPI) limits on government and corporate bonds will be raised by a total of INR966bn (around USD14bn) by the second half of FY2020.

Key Quotes

“Given that the percentage of limits currently utilised is only 63.8%, the move in itself will not spur an influx of foreign capital inflows.”

“But by continuing to increase the FPI limits even when there are ample limits available, the RBI is indicating that it is open to larger FPI involvement in the Indian bond market.”

“Even if we see a repeat of the large foreign bond inflows that occurred after the last election in 2014, there is more than enough room to accommodate such inflows before the new limits are reached.”