Low government bond yields have driven the Reserve Bank of India to consider expanding into non-G7 sovereign debt and even investment grade paper, AsianInvestor hears.
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The country's move to alter investment caps on sovereign bonds for foreign institutions amid the recent sell-off should help further boost interest in Indian assets, say custody executives.
Liquidity tightening by the central bank has caused negative NAVs for bond funds across the yield curve. Heavy redemptions could cause problems, but hope remains.
The research firm's economists argue that Indian growth is slumping while inflation is headed for double digits.
Y.V. Reddy, governor of the Reserve Bank of India, says the pros and cons of India having its own sovereign wealth fund are still under debate.