Dipy,
First, the article is from "The Hindu", dated May 19, 1998.
Thanks.
And the connection I was trying to make is that once the economy is in a downward spiral, the
RIBs would turn out to be not as safe as some people think.
Of course. The Indian economy is not in as good a shape as the
US economy. Political uncertainty means one do not know who will
be ruling five years hence. While it is true, as Ratan said,
that India hasn't defaulted on its debts so far, the wrong
economic conditions combined with the wrong kind of
political leadership can create some problems.
Also, where did you see the information that the RBI has cut interest rates recently?
That was my recollection. On investigation, the last cut was
at the end of April, which is recent, but before "the crisis"
developed. However, they haven't increased interest rates, and
there were cuts in March also. So RBI has been loosening
the money supply.
And how
are they propping up the rupee against the dollar? If they are not dumping dollars from their
forex reserves, they must be raising short-term interest rates (probably they are doing a bit of
both).
It is no secret they have been depleting the
forex reserves to protect the rupee. It was $29.5b on
April 17th, 1998. $26.6b on August 14th 1998.
All statistical figures in this message are
from the RBI itself, at reservebank.com |
