The name is dollar bond | The Indian Express

The name is dollar bond | The Indian Express

Written by Duvvuri Subbarao |Updated: August 3, 2019 12:35:05 am

Duvvuri Subbarao, former RBI governor, is a retired IAS officer. Views are personal.

The name is dollar bond

Government’s proposal is the right way forward but it’s an idea whose time has yet to come

 The difference now will be that the bonds will be offshore, denominated in hard currencies, and the government, rather than the investor, will bear the exchange risk. (Source: REUTERS/File)

The finance minister’s budget announcement that out of its total borrowing requirement, the government will raise a modest amount in foreign currency in foreign markets has become quite contentious with many critics panning the decision as needless adventurism. It’s not as if the government does not borrow from foreign parties; foreign portfolio investors are allowed, albeit within some limits, to buy the government’s onshore rupee bonds. The difference now will be that the bonds will be offshore, denominated in hard currencies, and the government, rather than the investor, will bear the exchange risk.