Skip to main content

RBI Trims its Gilt Holdings as Rates Rise in US

By
The Reserve Bank of India is trimming its holding of US Treasuries joining many other emerging economies which have been selling off US bonds amid rising rates. Yet, it figures in the list of top-15 foreign lenders to the US government. RBI sold $16.3 billion worth of US treasury (USTs) bonds since April with its stock slipping from $157 billion as of March-end to $140 billion as of August-end, according to the latest data released by the US Treasury department. In the same period, China sold USTs worth $22.6 billion, while Taiwan sold $6.9 billion worth of USTs. This could be to reduce their mark-to-market losses as bond prices fall when interest rates rise.
In India’s case, it is also due to the fact that RBI needed US dollars to sell in the market to stop the steep currency slide. The Indian central bank sold foreign currencies worth $18.6 billion in the spot market since April to rein in the value of the rupee. Foreign portfolio investors have pulled out more than $10 billion of their investments in Indian markets since April. This has resulted in the rupee losing more than 10% in value against the dollar. “If FPI flows do not revive amid an USChina trade war, the RBI may need to sell another $10-15 billion by March,” stated a report by Bank of America Merrill Lynch. There could be more pressure on RBI to sell its holding of US bonds to meet dollar demand.
The Reserve Bank could also be using a part of the sales proceeds of USTs to buy gold as it is seen as a hedge against volatile currencies. During the same period, RBI has bought 6.3 lakh troy ounce worth of gold. The outstanding stock of gold in its reserves rose to 18.64 million troy ounce in August from 18.01 million troy ounces in March 2018, according to data submitted to the IMF. Of the $400 billion worth of foreign currency reserves as of August 2018, $239 billion is invested in top rated sovereign bonds, $20 billion is in gold and the balance is parked as cash with foreign central banks, commercial banks and multilateral agencies.

The Economic Times, 22th October 2018

Comments

Post a Comment

Popular posts from this blog

New income tax slab and rates for new tax regime FY 2023-24 (AY 2024-25) announced in Budget 2023

By
  Basic exemption limit has been hiked to Rs.3 lakh from Rs 2.5 currently under the new income tax regime in Budget 2023. Further, the income tax slabs in the new tax regime has been changed. According to the announcement, 5 income tax slabs will be there in FY 2023-24, from 6 income tax slabs currently. A rebate under Section 87A has been enhanced under the new tax regime; from the current income level of Rs.5 lakh to Rs.7 lakh. Thus, individuals opting for the new income tax regime and having an income up to Rs.7 lakh will not pay any taxes   The income tax slabs under the new income tax regime will now be as follows: Rs 0 to Rs 3 lakh - 0% tax rate Rs 3 lakh to 6 lakh - 5% Rs 6 lakh to 9 lakh - 10% Rs 9 lakh to Rs 12 lakh - 15% Rs 12 lakh to Rs 15 lakh - 20% Above Rs 15 lakh - 30%   The revised Income tax slabs under new tax regime for FY 2023-24 (AY 2024-25)   Income tax slabs under new tax regime Income tax rates under new tax regime O to Rs 3 lakh 0 Rs 3 lakh to Rs 6 lakh 5% Rs 6
Post a Comment
Read more

Jaitley plans to cut MSME tax rate to 25%

By
Income tax for companies with annual turnover up to ?50 crore has been reduced to 25% from 30% in order to make Micro, Small and Medium Enterprises (MSME) companies more viable and also to encourage firms to migrate to a company format. This move will benefit 96% or 6.67 lakh of the 6.94 lakh companies filing returns of lower taxation and make MSME sector more competitive as compared with large companies. However, bigger firms have shown their disappointment since the proposal for reducing tax rates was to make Indian firms competitive globally and it is the large firms that are competing globally. The Finance Minister foregone revenue estimate of Rs 7,200 crore per annum for this for this measure. Besides, the Finance Minister refrained from removing or reducing Minimum Alternate Tax (MAT), a popular demand from India Inc., but provided a higher period of 15 years for carry forward of future credit claims, instead of the existing 10-year period. “It is not practical to rem
1 comment
Read more

Don't forget to verify your income tax return in August: Here's the process

By
  An ITR return needs to be verified within 120 days of filing of tax return. Now that you have filed your income tax return, remember to verify it because your return filing process is not complete unless you do so. The CBDT has reduced the time limit of ITR verification to 30 days (from 120 days) from the date of return submission. The new rule is applicable for the returns filed online on or after 1st August 2022. E-verification is the most convenient and instant method for verifying your ITR. However, if you prefer not to e-verify, you have the option to verify it by sending a physical copy of the ITR-V. Taxpayers who filed returns by July 31, 2023 but forget to verify their tax returns, will get the following email from the tax department, as per ClearTax. If your ITR is not verified within 30 days of e-filing, it will be considered invalid, and may be liable to pay a Late Fee. Aadhaar OTP | EVC through bank account | EVC through Demat account | Sending duly signed ITR-V through s
Post a Comment
Read more