When $640 billion is not enough

To be fair, the RBI has broadly done well in terms of managing the currency since the outbreak of the pandemic


Rajesh Kumar
Currency management is inherently tricky for a large emerging market country like India with a near-perpetual current account deficit (CAD). Since India imports a significant amount of capital from the rest of the world, a sudden change in global financial conditions could be potentially destabilising. It is, therefore, extremely important for the Reserve Bank of India (RBI) to remain vigilant.

The complexity of currency management can be gauged from developments over the past year. Reserve accumulation looked a bit excessive to some as it crossed the $600-billion mark last year. Ideas were floated as to how the RBI can maximise returns. This column in November 2021 had discussed the practicality of some such ideas and argued that the “most valuable thing
Disclaimer: These are personal views of the writer. They do not necessarily reflect the opinion of www-business-standard-com-nalsar.knimbus.com or the Business Standard newspaper

First Published: Jul 28 2022 | 10:05 PM IST

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