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Veteran Trader in India Says RBI is Not a Concern Yet

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EDITOR NOTE: HDFC Bank, one of the largest banks in India, is trying its best to assure investors that they “can safely hold onto their sovereign debt as yields aren’t poised to rise soon.” This positive outlook comes despite the fact, “a schism appeared among Reserve Bank of India (RBI) members last month about how long ultra-easy policy can remain.” Tapering is coming around the globe as both the European Central Bank and the U.S. Federal Reserve are signaling that the tapering of asset purchases will start soon in order to combat rapidly rising inflation around the globe. Investor confidence is a major key to keeping the global economic bubble from bursting right now and, HDFC is doing its part to keep it as high as possible. Soon, though, assurances and optimism simply won’t be enough to keep the good times rolling.

One of the largest banks in India believes investors can safely hold onto their sovereign debt as yields aren’t poised to rise soon, even with some policy makers starting to talk about tightening.

Investors shouldn’t worry about surprise losses and can keep their positions for now, as record low rates and an abundance of cash should help eke out more profit in coming quarters, Ashish Parthasarathy, treasurer at HDFC Bank Ltd., the country’s biggest lender by market value, said in an interview.

The veteran banker is staying bullish even after a schism appeared among Reserve Bank of India members last month about how long ultra-easy policy can remain. Markets globally are becoming edgier about a tapering of asset purchases after comments on normalizing policy from central bankers, including some at the European Central Bank. 

In India, “we are just not in an accommodative mode, we are in a super-accommodative mode,” said Parthasarthy, who’s worked in trading for more than three decades. “Every central bank, including India, wants to see sustainable growth and will ignore larger inflationary pressures.”

He’s sticking with this view even after minutes from the RBI’s latest board meeting revealed division. Yields on 10-year government bonds jumped to 6.26%, the highest in more than a year, in the days after the release. They’ve since pulled back to 6.19%.

Read more at Bloomberg

All articles are provided as a third party analysis and do not necessarily reflect the explicit views of GSI Exchange and should not be construed as financial advice.

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