The first remarks made by Janet Yellen after she was officially named by Barack Obama as the candidate to become the next head of the US Federal Reserve, have been expectedly dovish. Yellen spoke about how too many Americans are still out of jobs and how monetary policy can help them.

Yellen at the helm of US monetary policy may well be good news for emerging markets such as India, because she is more likely to continue buying bonds with newly created money. After all, the recent swings in the rupee have been linked to expectations about US monetary policy.

However, Indian policymakers should not let their guard down. Easier financing conditions in the global economy only offer some welcome extra breathing space. The problems in the Indian economy continue.

That should seem quite obvious, but the recent weeks have seen a swing from panic to confidence. Yellen may be a friend, but she is not a saviour.