$10 Billion Forex Losses: Shock or Strategy

The asymmetric nature of the shock to the US and Indian economy is playing to the RBI’s advantage, but some of the risks – particularly if investors decide to flock back to Chinese tech stocks – will truly test the RBI’s resolve, writes Ram Iyer.

The last two weeks have seen a sharp decrease of $10billion in India’s forex reserves. In ordinary circumstances this would have raised alarm bells of investors pulling out dollar deposits in search of better returns from the long anticipated and now confirmed first of a series of 25 basis points rate hikes by Jeremy Powell.