Putting economic engagement at the centrestage of their relations, India and the United Kingdom said Thursday that they will sign commercial deals of 9.2 billion pounds over the next three days
Earlier, British Prime Minister David Cameron said, “ We want to become the number one partner to finance the immense economic vision of Prime Minister Modi and make London the centre for offshore rupee trading with the launch of 1-billion worth of bonds including the first government-backed rupee denominated bond.” Source
IN ORDER FOR LONDON TO BE CENTER FOR RUPEE TRADING INDIA WILL HAVE TO MOVE TO A FULL CONVERTIBILITY REGIME FROM THE PRESENT CURRENT ACCOUNT COVERTIBILITY
Full convertibility of rupees means unified market determined exchange rate regime, converting rupees in to foreign currencies on both sides i.e. from “current account” and from “capital account” side. Current account Convertibility means the exporters and importers are allowed a free conversion of rupee. Also remittances to or from relatives living abroad means current account convertibility.
Capital account convertibility means, that rupee can now be freely convertible into any foreign currencies for acquisition of assets like shares, properties and assets abroad. Further, the banks can accept deposits in any currency.Similarily foreigners can buy Indian assets with foreign currency (if buyer wants it) or buy Indian assets after buying Indian currency without any permissions
What is restricted at the moment (partial list)
- Investment into certain sensitive sectors (like real estate) by foreigners
- Cap on debt that Indian company can raise in foreign currency
- Annual cap on how much money an Indian investor can transfer abroad (this used to be quite large something like $250,000 and then probably reduced during the 2013 crisis. )
- Short term borrowing restriction for Indian companies
In short if London does indeed become the center of a thriving Rupee trade the pressure to do away alltogether with such pesky restrictions will be tremendous
The International Forex Market itself is corrupt and manipulated In May 2015 there was a massive Forex Exchange Rate Scam in the US and Europe Regulators fined six major banks including Citigroup (C.N) and UBS (UBSN.VX) a total of $4.3 billion for failing to stop traders from trying to manipulate the foreign exchange market
Indian debt market can be classified into two categories: –
Government Securities Market (G-Sec Market): It consists of central and state government securities. It means that, loans are being taken by the central and state government. It is also the most dominant category in the India debt market.
Bond Market: It consists of Financial Institutions bonds, Corporate bonds and debentures and Public Sector Units bonds. These bonds are issued to meet financial requirements at a fixed cost and hence remove uncertainty in financial costs.
Indias public debt (Govt Debt) is nearly 1.5 trillion dollars or $1,532,750,819,672 to be exact according to Economist.com Its Public Debt as percentage of GDP is 53.9% Now if borrowing can be done in rupees (as opposed to dollars) and the process becomes simpler and easier Indias already high debt will just balloon up as raising rupee s just became easier
MOST OF INDIAN GOVT DEBT(ANND TO A LESSOR EXTENT INDIAN CORPRRATE DEBT) IS OWNED TO RESIDENT INDIAN CITIZENS AND THE FOREX RUPEE MARKET CONTROLLED BY THE RBI …….SO MANIPULATION BY FOREIGNERS IS NOT EASY
Guess which family controls the debt market in UK if not the whole world ?
And in the currency guess which gentle man “Broke the Bank of England” whilst happily letting the Pound go on a free fall? And then repeated the process in Thailand ?
THE FIRST IS BASED IN LONDON THE SECOND OFTEN FUNCTIONS FROM LONDON …..DOES MODI STILL WANT INDIAS DEBT AND FOREX MARKETS TO BE BASED IN LONDON?