Rajandran R Telecom Engineer turned Full-time Derivative Trader. Mostly Trading Nifty, Banknifty, USDINR and High Liquid Stock Derivatives. Trading the Markets Since 2006 onwards. Using Market Profile and Orderflow for more than a decade. Designed and published 100+ open source trading systems on various trading tools. Strongly believe that market understanding and robust trading frameworks are the key to the trading success. Writing about Markets, Trading System Design, Market Sentiment, Trading Softwares & Trading Nuances since 2007 onwards. Author of Marketcalls.in and Co-Creator of Algomojo (Algorithmic Trading Platform for DIY Traders)

Rupee Linked Offshore Bonds

1 min read

With the initiation of a program sponsored by the World Bank, international investors can be able to buy offshore rupee-dominated bonds. By this program, World Bank aimed to further strengthen the financial market in the country by attracting overseas investment.

According to the Press Release circulated by World Bank’s International Finance Corporation (IFC), the program has got overwhelming response. The series of rupee linked bond released by the IFC worth a total of US$1 billion. The first issue, valued at US$160, had amazing demand.

Being the member of World Bank, the primary task of IFC is to develop innovative strategies that eventually boost the economic opportunities across the Globe. With the rupee linked offshore bonds program, IFC have this goal in mind to strengthen India’s capital market, so as to make the Indian market lucrative for the foreign investors to invest on and the Indian economy gains a certainty. The binds could be an alternative source of rupee funding for investment in the nation.

rupee linked bonds
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As per the terms mentioned in the bonds, an annual rate of interest of 7.75 percent will be offered over a period of three year. The bonds will be purchased and settled using the US dollar, with the interest payments being based on the rupee’s exchange value against the USD. The International Finance Corporation will be using this bond’s to offer financial backing to the private sectors in the country.

Seeing the scenario from the investor point of view, there was immense excitement post the release of the offshore rupee linked bonds. The response from the investor was greater then what was expected. The initial demand of the bonds is indicating towards the fact that greater and strong demands in future and more bonds should be issued under this program. As per the experts of the IFC, the responses from the global investors are extremely positive and often IFC received double bids for twice the benchmark size of US$ 160 million.

The Indian Government has also greeted the new offshore rupee-linked bonds with open arms and appreciated IFC’s strategies to the Indian economy. Indian experts of economic affairs believe these bonds will strengthen India’s capital market and will bring back the foreign investors, alongside the international savings would also be used in order to bring development to the nation.

Furthermore, permitting the investors to purchase the rupee linked bonds with the use of US Dollar IFC strongly believes to dampen the effects of rapid capital movement between currencies. In the coming years, this feature is going to be immensely important as the United States Federal Reserve adjusts the monetary policy. Such changes can eventually lead to the migration of foreign investors from international currencies which could cause huge fluctuations in the currency’s value.

IFC strongly perceives their new program could pave a way to increase liquidity in the offshore market for the rupee-linked bonds. This rupee linked bonds could also help in providing hedging mechanisms for the investors across the globe. The high potential of this bonds are indeed a matter that invokes some positive vibes in the Indian economic situation.

Rajandran R Telecom Engineer turned Full-time Derivative Trader. Mostly Trading Nifty, Banknifty, USDINR and High Liquid Stock Derivatives. Trading the Markets Since 2006 onwards. Using Market Profile and Orderflow for more than a decade. Designed and published 100+ open source trading systems on various trading tools. Strongly believe that market understanding and robust trading frameworks are the key to the trading success. Writing about Markets, Trading System Design, Market Sentiment, Trading Softwares & Trading Nuances since 2007 onwards. Author of Marketcalls.in and Co-Creator of Algomojo (Algorithmic Trading Platform for DIY Traders)

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