Reserve stockpiling and managing its monetary consequences: the Indian experience

Alice Y. Ouyang () and Ramkishen S. Rajan ()

Macroeconomics and Finance in Emerging Market Economies, 2008, vol. 1, issue 1, pages 75-91

Abstract: India's foreign exchange reserves have risen rapidly since the balance-of-payment crisis in 1991 to over US$155 billion by mid-2006. India is now the fifth largest Asian reserve holder. Despite this, scant attention has been paid to the rationale for and impact of reserves accumulation in India. This paper estimates the extent of de facto sterilization and capital mobility concurrently for the period 1990:q1-2004:q4. While India appears to have sterilized capital inflows quite aggressively, as the extent of de facto capital mobility continues to rise, it might become increasingly difficult to continue to sterilize going forward.

Keywords: balance of payments; capital mobility; money supply; reserves; India; sterilization (search for similar items in EconPapers)
Date: 2008
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