Re: [IAC#RG] Indian investment in US Bonds

Dear Pavan

I have no inputs on this. Since 2010 the IN Rupee has depreciated by
35% against major currencies. INR has been the worst performing major
currency. RBI has probably prudently moved our FOREX reserves into the
safest place it can find :-)

NRI's being NRIs, GoI can probably refuse to pay them when the shit
hits the fan.

Sarbajit

On 8/19/14, pavan nair <pavannair1@gmail.com> wrote:
> Dear Sarbajit,
>
> I came across a report in the Economic Times of today regarding the
> subject. Here is the link.
>
> http://economictimes.indiatimes.com/news/economy/finance/india-among-top-16-lenders-to-us-as-bond-investments-hit-73-billion-in-june/articleshow/40382761.cms
>
> I find it inexplicable that we have been borrowing money from NRIs at rates
> OF up to 9% per annum for NRO/NRE accounts and lending money to the US
> government in the form of US treasuries at very low rates of about 2%. The
> lending to the US has increased by 19% in the last financial year. The
> external debt stands at 440.6 billion dollars as on 31 March 2014 and has
> risen substantially primarily on account of increased NRI investment which
> stands at 103.8 billion dollars. The reserves are at about 320 billion
> dollars which includes the NRI borrowing. This amounts to a loss of
> taxpayer money since we need to buy dollars at existing market rates to
> payout the interest to NRIs. There seems to be an arrangement with the US
> government in return for something unknown, otherwise why should a poor and
> indebted country like India lend more to the US than developed countries
> like France, Canada and Germany. We need to retire debt so that debt
> servicing which is at about 25 billion dollars per annum can be reduced.
> May I request you and through you, other members of the list for their
> views as also what action can be taken. Has the Governor RBI got the
> authority to invest or is it a Cabinet decision. Regards. Pavan Nair
>