Business   

Experts favour strong local bond markets

Special Correspondent

`Improve markets qualitatively before moving towards convertibility'

HYDERABAD: Experts at a seminar during the Asian Development Bank (ADB) annual meeting here favoured developing a strong local bond market in each of the Asian economies before going in for integration of regional financial markets.

Bank of International Settlements chief representative, Robert N. McCauley, said the financial integration in Asia varied across the markets.

In bond market, risk was that the regional integration would take place in offshore U.S. dollar market that encouraged currency mismatches.

This called for the need to develop local currency bond market, especially corporate bond market.

Mr. McCauley said the policy imperative was to build national bond markets in local currency. Against the threat of global markets `cherry-picking', regional efforts would have to be to build domestic bond markets.

"The key choice is what kind of fixed income market integration Asia wants — one based on the dollar markets or one based on domestic currencies," he said.

According to the Prakash Apte, Director, IIM Bangalore, the Indian debt markets, particularly corporate debt markets, were miniscule in size while the Indian financial markets were still comparatively small and underdeveloped.

The equity market had grown substantially in size and improved significantly in terms of quality while the debt market continued to be shallow and inactive.

"We should first deepen and qualitatively improve our markets before we open them up and move towards capital account convertibility," he added.

Printer friendly page  
Send this article to Friends by E-Mail

Stories in this Section

Chidambaram seeks strategic shift in ADB's lending focus
Record prices deter gold buying
Experts favour strong local bond markets
Usha Martin to commission Houston facility
Kenstar launches range of TVs

Copyright © 2006, The Hindu. Republication or redissemination of the contents of this screen are expressly prohibited without the written consent of The Hindu