April 11, 2014 1:01 PM

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No nation can insulate itself from external vulnerabilities: RBI Governor

Reserve Bank Governor Raghuram Rajan has said though the country has enough foreign exchange reserves, no nation can fully insulate itself from external vulnerabilities.At a conference organised by the Brookings Institution in Washington yesterday he said that India is well-buffered with substantial reserves, though no country can be de-coupled from the international system.In the just-concluded financial year, the country's forex reserves crossed 300 billion US Dollar mark, the highest since December 2011. For the week to March 28, the reserves rose by a whopping 5.038 billion dollars to over 303 billion dollars, the second highest in the fiscal. During the period, foreign currency assets also jumped by 5.011 billion tdollars to over 270 dollars.Talking about the unconventional policy in industrial countries, he said when monetary policy in large countries is extremely and unconventionally accommodative, capital flows into recipient countries tend to increase local leverage.The comments assumed importance as the traditional position of the central bank has been not to set a forex reserves target. China's foreign exchange reserves stood at a staggering 3.66 trillion dollars as of end 2013, making it the largest in the world, while at the best of times, India couldnot shore up more than 322 billion dollars.

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