Economics
India's Central Bank Chief Seen Unlikely to Raise Quota on Debt
- RBI faces choice between inflation and allowing capital flows
- Global funds have bought more than 99 percent of bond quotas
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Foreigners looking to buy Asia’s best bonds will probably have to wait.
Reserve Bank of India’s Governor Urjit Patel is unlikely to raise the quota on debt after inflows surged and muddied policy choices. He can’t allow runaway currency gains because exports are only just recovering from a slump, so he’s buying up the dollars pouring in. This injects rupees into a bloated banking system, complicating efforts to reduce liquidity. At the same time, slowing growth pushed him to cut the policy rate this month.