RBI

RBI’s dollar mobilization drive has far exceeded expectations, drawing $136.4 billion. But the inflows have also sloshed the banking system with liquidity, leaving the central bank with a problem of plenty, and no easy way to drain it without other costs.

Be it Amartya Sen’s tackle of Arrow’s impossibility theorem on social choice or India’s fuzzy-logic position on a macro trilemma in the face of a dollar in-surge, what cannot be done can also get minds whirring. It’s why all eyes are on RBI.

The Reserve Bank of India’s swap scheme for forex deposits has been a dramatic success, going by the huge sum of money attracted. Don’t bemoan its closure ahead of schedule, though. Here’s why

In a 6 August draft circular, RBI proposed barring non-banks from issuing revolving credit.

Even the central banks of US allies are diversifying away from the dollar. Notably, US debt is no longer risk free. In an extreme global crisis, a diversified reserve base would serve India well. And risk mitigation isn’t de-dollarization.

Declining PMI momentum, coupled with margin risks and potential capex cuts, suggests the economy faces a trickier second half despite strong Q1 growth.