FPIs withdrawing from Indian bonds amid raging 2nd wave: Current Affairs Special Series

Team Adda247 and BankersAdda are here with a Current Affairs Special Series for SBI and IBPS interview 2021.  In this series, candidates will be introduced to current affairs topics daily, which will not only improve their general awareness but also will ensure that the candidates do not lack if any current affairs topic is asked in the interview. Today’s Current Affairs topic is FPIs withdrawing from Indian bonds amid the raging 2nd wave.

FPIs withdrawing from Indian bonds amid raging 2nd wave

Foreign Portfolio Investors have sold debt securities worth more than Rs.16000 crore amid rising fears for growth and interest rates due to high government borrowings. Even FPIs purchased more than Rs.38000 crore of equities in believing the country’s high growth prospects.

Bloomberg data show the rupee has turned out to be the worst-performing Asian currency in April with the local unit losing 1.32% to the greenback. A fall in the rupee’s value curls the realization of investment returns for offshore investors. American rating agency S&P cut Indian economic growth outlook citing localized restrictions on mobility amid the second wave of Covid-19. It has also retained its outlook as ‘stable’ with the limiting the risk of any immediate sovereign rating downgrade. According to the data of the National Depository Securities, the utilized debt investment limits offshore investors and their optimism plunged to 23% for corporate and 39.7% for sovereign securities from 54% for both at the time of the beginning of last financial year.

Record low-interest rates are also forcing overseas investors in debt to exit as they don’t see capital appreciation, if interest rates would be a rise in coming quarters the existing bonds will lose their value with yields rising, and when the bonds yield rise, prices fall. US treasuries have been rising since August last year which shows the economic improvement with an indication of falling joblessness and rising consumer spending.   

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