India RBI Cash Stance Likely to Push India Yields Lower: Nomura
Source: BFW (Bloomberg First Word)
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Prashant Pande (Nomura Holdings Inc)
Vivek Rajpal (Nomura Holdings Inc)
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UUID: 7947283
(Bloomberg) -- RBI’s OMO purchase amid large liquidity surplus suggests the central bank is differentiating between short-term and durable liquidity, Vivek Rajpal and Prashant Pande, Singapore-based strategists at Nomura write in note.
Alert: HALISTER1- RBI appears more focused on providing longer-term liquidity
- RBI’s refined cash management is ensuring that fixings remain close to repo rate despite surplus cash
- NOTE: System cash surplus around ~960b rupees while overnight fixing today at 6.50%
- RBI is now focused on the quantity of money, even while controlling price of money
- Central bank is taking a proactive approach ahead of non- resident deposit outflows
- Expects spread compression between off-the-run and on-the- run bonds as better liquidity feeds into yield-chasing by local investors
- Long bond positions include 7.72% 2025, 7.68% 2023 and 8.27% 2020; sees value in adding position in 7.72% 2025 bond
- Extending long bond positions further down yield curve since June; gradually shifting from offshore swaps to bonds as RBI’s focus remains on liquidity than rate cuts
Source: BFW (Bloomberg First Word)
People
Prashant Pande (Nomura Holdings Inc)
Vivek Rajpal (Nomura Holdings Inc)
To de-activate this alert, click here
UUID: 7947283