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Reserve stockpiling and managing its monetary consequences: the Indian experience

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  • Alice Ouyang
  • Ramkishen Rajan

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.

Suggested Citation

  • Alice Ouyang & Ramkishen Rajan, 2008. "Reserve stockpiling and managing its monetary consequences: the Indian experience," Macroeconomics and Finance in Emerging Market Economies, Taylor & Francis Journals, vol. 1(1), pages 75-91.
    • Handle: RePEc:taf:macfem:v:1:y:2008:i:1:p:75-91
    DOI: 10.1080/17520840701835021
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    References listed on IDEAS

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