HALISTER1: India Currency Note Move Positive for Rates; Long Bonds: Nomura

India Currency Note Move Positive for Rates; Long Bonds: Nomura

(Bloomberg) -- India’s move to withdraw high-denomination bank notes will enhance the banking system liquidity and should normalise the rise in currency-in-circulation outflow, Vivek Rajpal, rates strategist at Nomura, says.
  • Expect rates market to treat news positively; comfortable with long bond recommendations
  • Outflows due to currency-in-circulation is big drag on banking system liquidity
  • While latest move reduces need for open market operations and can hurt long-term rates, positive liquidity impact over time should outweigh technical impact
  • NOTE: India withdraws high-denomination bills in graft crackdown
Alert: HALISTER1
Source: BFW (Bloomberg First Word)

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Vivek Rajpal (Nomura Holdings Inc)

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