The Hindu Business Line : RBI policy

This refers to the editorial, `Reclusive RBI' (Business Line, July 27). The central bank seemingly took much trouble to keep the Bank rate and reverse repo rates untouched, somewhat contrary to market apprehensions. The decision to increase the risk weight on the credits to real estates/stocks does not cause any concern, as too much exposure in these sectors may not be in line with the basic policy guidelines of RBI.

It is also welcome that the RBI Governor has negated the yuan revaluation effect in an assertive manner. The jumping indices in the Indian stock market would pave way for more inflows of dollar, thereby replenishing the foreign exchange assets. Oil prices may have to be increased after some time.

The main concern is the monsoon, which can have a lot of influence on `inflation cut' through bumper crops and nullify the the inflationary trend set by the oil prices. The RBI has indeed played the role of an economy promoter while conducting the monetary policy review.

C. P. Velayudhan Nair

Kochi

Letters to the editor and contributions can be sent by e-mail to: bleditor@thehindu.co.in

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