(This article first appeared in The Indian Express on September 30, 2022)
- With global central banks battling persistent inflationary pressures, nurturing India’s domestic demand will require a fine balancing act, especially as global growth slows down. The foreign exchange reserves accumulated because of the ultra-loose global monetary policies are being utilised as the same global monetary policies now rapidly reverse. Recalling the impossible trinity, defending any levels of the exchange rate on a sustained basis, given the global context, could unduly impinge on monetary policy…