Monday, August 25, 2014

How Dr Raghuram Rajan is 'bullet-proofing' India

It will be an understatement to say the RBI has been blessed with governors who are men with foresight. Governors ranging from Dr Y.V Reddy to Dr Subbarao have shown poise in the manner in which they maneuvered Indian financial markets through the toughest of global financial crisis. It seems Dr Rajan is no different. He has been the most vocal central banker to criticize the selfish monetary policies of the West in recent times. Having predicted the 2008 crisis in the US, this time around he had predicted global crisis of bigger proportion. However, instead of leaving the fotune of the Indian economy and its currency at the mercy of the US policy makers, Dr Rajan is taking tangible safety measures. As oil prices relented over the past few months, Dr Rajan has been building India's forex reserves. A measure that will ensure even if the US Fed rocks global economy with its policies, India will remain resilient to a great extent.

Below chart shows how the RBI is literally bullet proofing the currency by building Forex reserves.
                                           RBI buys up Dollars to re-build Forex Reserves

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