|
June 14: The Reserve Bank of India (RBI) has ‘‘so far’’ managed capital inflows and the currency's exchange rate by purchasing dollars and mopping up excess cash, deputy governor Rakesh Mohan said.
‘‘The Dutch Disease syndrome has so far been managed, preventing excessive nominal appreciation and higher inflation,’’ he said in a speech at Banque de France in Paris.
‘‘However, the issue remains how long and to what extent such an exchange- rate management strategy would work’’ in the face of large and continuing capital flows.
The term Dutch Disease typically refers to a situation where a country's currency appreciates rapidly as a result of increased capital flows from overseas, making the manufacturing industry less competitive. India's rupee has risen 8.2%, and is the second-best performer in Asia, as the fastest pace of growth in almost two decades lures foreign direct investment and capital flows into the stock market.
The Reserve Bank of India allowed currency gains on speculation a stronger rupee helped contain inflation. It has also intervened to stem the rise, and sold bonds to drain rupees injected into the banking system as a result.
Discuss this story on expressindia forums
|
|
 |
 |
 |
About Us | Contact Us | Advertisers | Site Map | Make us your homepage | Work for Us | RSS | Subscribe | Electronic Edition | Privacy Policy© 2010: The Indian Express Limited. All rights reserved throughout the world
