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Monday, Feb 02, 2004

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Opinion - Letters

Forex reserves

There has been no let-up in the surge in forex reserves. Remittances (unrequited transfers) are an important contributory factor.

Since the Lok Sabha election is due shortly one may expect the trend to continue.

If the trend continues, the level of reserves is likely to reach around $120-$125 billion before the elections are held.

The Reserve Bank of India has a massive task on hand to sterilise the inflows.

The price level has already started shooting up and it is not good news for the parties in power.

It may cancel the effect of the "feel good" factor.

Since forex is no longer a constraint the timely management of the supply side of the economy through imports, wherever necessary, should help in containing the rise.

A. Seshan


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