RBI To Hike FPI G-Sec Limit By $5 Billion: BofAML

Analysts at BofAML anticipate the Reserve Bank of India will hike FPI G-Sec limits by $5 billion, as demand for G-Sec from FPIs will diminish if the central bank rate cuts run their course.

Hak Bin Chua and team at Bank of America Merrill Lynch in their June 26, 2015 report titled: “India: three reasons to expect FPI G-sec limit hike” anticipate the RBI to trim 50bp more by January 2016.

Hike in FPI G-sec limit

The BAML analysts offer three reasons for an increase in the FPI G-sec limit. First, the analysts anticipate demand for G-sec from FPIs will diminish as the RBI rate cuts finish up. Secondly, they say “hot” money worries are overdone, as the RBI is buying the...