This is with reference to "Dr Reddy's thoughts on forex reserve management" (
Business Line, November 6). High forex reserves could prove to be an impediment to the economy unless managed well.
Why wait to study the feasibility of adapting the Singapore model?
It is a fact that the poor management of forex reserves can lead to the unwanted expansion of M3, resulting in inflation.
When the maintaining of the reserves themselves becomes risky, it is advisable to invest a part of it in domestic infrastructure development or use it to strengthen the micro-financial institutions.
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