............The immediate need is to strengthen the reserves and arrest the depreciation of the rupee through the inflow of capital. There have been talks about floating a sovereign bond in international markets. If the purpose is to augment the reserves, whatever resources the country raises will be added to RBI's kitty. It will be invested in low-yielding treasuries of foreign governments and deposits of international institutions. The net outgo due to the difference between interest paid and investment income will be a drain on the forex resources. There are legal problems in floating bonds in the US limited to non-resident Indians (NRIs). And that is the country where there are a large number of high net-worth NRI professionals looking for good yields. At his post-policy meeting with the press, the RBI governor mentioned his reservations about floating a sovereign bond..............
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