Noting that India was not insulated from global developments like the credit downgrade of the US, the Reserve Bank today said it was closely monitoring the situation and would continuously assess the impact on the Indian economy and financial markets. The RBI also said the entire policy and regulatory framework of the country must be prepared to respond to turbulent financial market conditions arising out of external developments.The RBI said, it will respond quickly and appropriately to the evolving situation. A sharp fall in US equity markets on Thursday was followed by a downgrade in the long-term US sovereign rating by rating agency Standard & Poor's from triple 'A” to double A plus. The RBI said, the US downgrading has raised concerns of continuing turmoil in global financial markets, as investors re-allocate portfolios in response to heightened risk perceptions stemming from both developments.