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RBI Monetary Policy: Credible tight monetary policy isn’t “currency defense” to draw in more flows

Updated : October 04, 2018 08:21 AM IST

India’s current account deficit (CAD) could balloon beyond $80 billion this year.
There are now a few calls for CRR cuts and/ or large-scale RBI purchases of government bonds (OMOs) to inject durable liquidity and reduce bond yields.
Even if the RBI decides to hike headlines policy rates, CRR cuts and large scale OMOs can dent monetary and currency credibility.
RBI Monetary Policy: Credible tight monetary policy isn’t “currency defense” to draw in more flows

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