India's exposure to US market climbs the fastest

By agencies   |   Monday, 25 April 2005, 07:00 Hrs
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MUMBAI:Amid signals of a rising U.S. interest rate and dollar, India has increased its exposure to U.S. treasury securities and bonds (USTs) by $2.1billion in February ’05. This is the highest increase among all major Asian investors in USTs.

India’s exposure to USTs went up from $13.9 billion in January ’05 to $16 billion in February ’05, up $2.1 billion, according to the latest data released by the department of treasury of the U.S. Federal Reserve Board.

The trigger to such a sharp hike has been Fed chairman Alan Greenspan’s announcement of hardening of the U.S. interest rate, which has seen the U.S. dollar marginally gaining in the international market.

Only four other major investors — U.K., the Caribbean, Ireland and France have invested higher amounts than India in USTs. In fact, no other major Asian investors including China and Japan have hiked exposure to USTs during the month.

As far as India is concerned, while the bulk of the investment in USTs is by the Reserve Bank of India, small amounts have been picked by domestic financial entities as well.

This means that almost a fourth of the reserves pile-up during the month has been parked in USTs. The central bank parks its reserves in sovereign papers and deposits in various central banks as well as foreign banks.

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