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RBI board to meet in Ranchi today

by praveen
October 11th, 2007

To review monetary developments ahead of mid-term credit policy
Amid problems caused by a depreciating dollar and rising foreign exchange inflows, the Reserve Bank of India board is meeting in Ranchi on Thursday to review monetary developments and discuss steps that may be initiated during the mid-term review of the credit policy on October 30.

The meeting of the RBI’s central board assumes significance as the central bank is in the process of firming up measures to deal with conflicting problems that include sluggish demand and slow growth of credit on one side and rising liquidity fuelled mainly by foregin exchange inflows on the other.

Ahead of its board meeting RBI Governor Y.V. Reddy had met heads of major banks and representatives of industry chambers to elicit their views on monetary developments and the steps that the central bank could take in its mid-year review of the credit policy to meet the aspirations of industry.

Forex inflow

One of the major problems that the RBI is facing is the acceleration of inflow of foreign exchange in the aftermath of the U.S. sub-prime mortgage crisis and the rate cut announced by the U.S. Federal Reserve.

According to the Reserve Bank of India weekly bulletin, foreign exchange inflows during the week-ended September 18 zoomed to $11.87 billions as against $3070 billion in the previous week.

These inflows are fuelling the stock market with the BSE Sensex speeding past the 18000-mark and the rupee piercing the nine-year high mark of 40 to a dollar value.

The initiatives of the RBI in the past to encourage out flow of foregin exchange by relaxing the regulatory norms do not seem to be yielding results.

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