Bond market participants have mixed feelings about the government’s plans to float sovereign bonds. On the one hand, participants say it will lessen the load from the domestic market; on the other hand, they say it might bring undue volatility in the domestic market should the overseas investors decide to short the bonds reflecting a global risk-off sentiment. In the domestic market, such things are easily controlled by the Reserve Bank of India (RBI), but it has no say in foreign jurisdiction.
The offshore non-deliverable forwards market (NDF), which often sets the sentiment for domestic currency markets, is an example where