Foreigners step up India bond purchases before anticipated interest rate cut
MUMBAI, Feb 5 (Reuters) - Indian government bonds are seeing increased buying interest from foreign investors ahead of an anticipated interest rate cut from the Reserve Bank of India this week.
Foreigners have net bought 182 billion rupees ($2.09 billion) worth of debt in the past seven days, surpassing the aggregate purchases from these investors in the previous 19 weeks, clearing house data showed.
"I would expect the central bank to start with a token rate cut of 25 basis points this week," said Ashhish Vaidya, managing director and treasurer of global financial markets at DBS Bank India.
Portfolio managers that are underweight on Indian bonds have started rebalancing their portfolios, as they might not want to miss out on the rally and underperform the global bond indexes, Vaidya said.
Overall foreign purchases of Indian bonds with no investment limit have surpassed the $20 billion mark since JPMorgan announced the inclusion of Indian debt in September 2023.
The RBI's monetary policy decision is due on Friday and markets widely expect a 25-basis-point rate cut.
Expectations were further bolstered by the central bank's announcement of a mega liquidity infusion package and its bond purchase in the secondary market.
The 10-year benchmark bond yield has eased 20 basis points from its highs hit three weeks ago, while overnight index swap rates have dipped by over 30 basis points in the same period.
Investors point to the risk of reversal of these flows, especially from shorter-term bonds, if the central bank does not deliver a rate cut.
"RBI's inaction could lead to disappointment and a sell-off in bond markets, pushing bond yields higher. The lack of a rate cut could increase volatility in bonds as investors reassess their positions," said Manish Bhargava, CEO at Straits Investment Management.
"Without a cut, 2-year and 5-year bond yields could rise as markets push out rate cut expectations."
($1 = 87.1520 Indian rupees)
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Reuters
22 minutes ago
- Reuters
Activist hedge fund Parvus builds stake in Novo Nordisk, FT reports
June 9 (Reuters) - Activist hedge fund Parvus Asset Management is building a stake in Novo Nordisk ( opens new tab, after the company lost its first mover advantage in the lucrative weight-loss drug market, the Financial Times reported on Monday, citing people with knowledge of the details. The London-based fund, which has targeted budget airline Ryanair (RYA.I), opens new tab and Italian bank UniCredit ( opens new tab, wants to influence the appointment of Novo Nordisk's new CEO, the report said. Novo told Reuters in an email that it does not "have anything to add." Parvus did not immediately respond to a request for comment. In May, the company announced its CEO Lars Fruergaard Jorgensen would step down after shares plunged from a record-high in June last year as competition, particularly from U.S. rival Eli Lilly (LLY.N), opens new tab, makes inroads into Novo's market share, while its pipeline of new drugs has failed to impress investors. Novo also expects its Wegovy weight-loss drug sales in the United States to start recovering once a ban on compound copycats is enforced this month, Jorgensen said last month after the company cut its 2025 forecasts.
Reuters
33 minutes ago
- Reuters
Canada's Allied Gold could look at options for power supply deal at Sadiola mine
TORONTO, June 9 (Reuters) - Canadian miner Allied Gold could look at alternative options for a power supply deal at its Sadiola mine in Mali following a surge in gold prices and the emergence of new opportunities, its CEO told Reuters in an interview on Monday. The gold miner signed an agreement in February with UAE-based Ambrosia Investment, giving Ambrosia a 50% stake in the mine in return for installing a new power supply system that would have improved the mine's costs. Allied Gold was also supposed to receive $500 million, with approximately $250 million in upfront cash consideration from Ambrosia. The deal is yet to close. Allied Gold CEO Peter Marrone said the deal may close in June, but if it does not, it is because other options have become available to the company. "Our position in the country has changed dramatically along with gold prices," Marrone said. "The world has changed since we put the deal together." Gold prices have surged nearly 30% this year to date and hit a record $3,500.05 per ounce on April 22. Ambrosia Investment did not immediately respond to a request for comment. Marrone said the universe of power solutions for the company changed dramatically after Allied Gold signed a new mining convention with the Mali government last year. Mali is Africa's third-largest gold producer and the military-led government wants to increase revenue from the mining sector. The government believes current arrangements are unfair and has said that foreign multinationals must comply with its demands if they want to continue operating. The country is in dispute with another Canadian miner, Barrick Mining, which is the only gold miner that has not signed Mali's new mining code. Allied Gold said it took a pragmatic approach to settling with the government. "We looked at how best we can deliver returns to our investors, and came to the conclusion that let's take an action based on cooperation and support," Marrone said. Allied Gold, already listed in Toronto Stock Exchange, began its dual listing on Monday on the New York Stock Exchange.
Wales Online
3 hours ago
- Wales Online
Nigel Farage on 20mph, coal mining and steel, as he explains vision for future for Wales
Our community members are treated to special offers, promotions and adverts from us and our partners. You can check out at any time. More info Reform UK leader NIgel Farage has spoken about his vision for the future of Wales, at a press conference today. He took to the stage just after 12pm in Port Talbot, with less than a year until the Senedd elections. His introduction had to be hastily rewritten given the UK Government's announcement, which went live at noon, that the winter fuel payment cuts are being partially reversed. Mr Farage said that Labour "knowing this press conference was taking place", announced they would make a fuel payment announcement at noon, as he was due to speak, but called it a "step in the right direction". He also announced independent councillors Andrew Barry and David Hughes, both members of Merthyr Tydfil council, have joined Reform UK, as they also took to the stage to explain how they had become disillusioned and moved to Reform. The most recent poll for Wales suggests his party is in line to take its first seats in the Senedd at the election in May 2026. Its only representation in Wales at the moment is with councillors, but a YouGov/Barn Cymru poll which asked people their voting intention for the Welsh Parliament in May put Reform UK in second with 25% of the vote. They were only behind Plaid Cymru who were projected to get 30% of the vote and ahead of Labour's 18%, reports Wales Online. In an opinion piece for WalesOnline, the party leader has given his first glimpses of policies ahead of the election. Mr Farage has said the party would allow coal mining again in Wales and says its long term plan is to "reopen the Port Talbot steelworks". The steelworks, owned by Tata, have not closed but its remaining blast furnaces were closed in 2024, with work now ongoing to build an electric arc furnace which will recycle previously-used steel. Thousands of jobs are being lost as part of the change. The Indian-owned company said the blast furnaces were at the end of their operational lives and too expensive to replace. The Port Talbot steelworks were, the company said, losing £1m a day before the blast furnaces were turned off. Reform UK say it would "use Welsh Development Grants to support real industry. We'll redirect economic funding from consultants and NGOs to actual factory floors, machinery, and industrial jobs in places like Llanelli, Shotton, and Ebbw Vale". Nigel Farage has also said the party would also set up "regional technical colleges" for people to have a "path into proper trade". (Image: Getty Images) The party would also, it says, stop any building being used for asylum seeker accommodation, end funding to the Welsh Refugee Council and scrap the Welsh Government's "Nation of Sanctuary". It also vowed to set up an Elon Musk style department to cut costs. "A Reform UK Senedd will also save hundreds of millions each year by cutting bureaucracy, waste and bad management. The establishment of Welsh DOGE will help us uncover where there is woke and wasteful spending and we will make sure those funds are redirected to frontline services," Mr Farage pledges. During the press conference Mr Farage also took aim at the controversial 20mph policy, saying he would reverse it. as he said he doubted the electric arc furnace at the Port Talbot Tata site would "every be switched on", but says their plan is to "reindustrialise Wales". He says in the coming years more steel will be needed and the UK should produce its own steel, and its own coal. "I'm not saying let's open all the pits, there are certain types of coal for certain types of uses, for the blast furnaces, we can use here," Mr Farage said, insisting it would be a small scale, specific mining and not like the "heydays of mining in Wales". Mr Farage also said there would be no going back on devolution, but criticised the running of Wales since. In response, a Welsh Labour spokesperson said: "Nigel Farage has no plans for steel - just a camera crew. You can't restart a blast furnace with a press conference. "Nigel Farage says that hopefully they mightthey'll bring back mining. The people of Wales will see through the false hope and false promises of a public-school boy from England who does not understand them and does not understand Wales. "His answer is to bring back the mines. The only thing Nigel Farage is trying to mine is votes from communities that have already gone through tough times. Nigel Farage has today brought his fantasy politics and magic money tree to Port Talbot. He's gambling with real people's livelihoods." Sign up for the North Wales Live newsletter sent twice daily to your inbox Find out what's happening near you
