Reserve Bank of India Governor Y V Reddy has said management of capital inflows can be a tough job. "We are an emerging economy and the developed economies are pumping in money, and (its) management is difficult," Reddy told representatives of India's financial market groupings, who called on him with suggestions ahead of the monetary policy release on April 24. | |
| "We are in an era where we are faced with very confusing realities and central banking is under terrible pressure," Reddy said, according to a dealer who was at the meeting. |
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| Representatives of the Fixed Income Money Market Association of India (FIMMDA), the Primary Dealers' Association of India, and the Foreign Exchange Dealers' Association of India met Reddy and Deputy Governor Rakesh Mohan on Monday. |
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| Reddy reiterated that the central bank's aim was to rein in inflation and inflationary expectations. "We are a growing economy and we have to see that inflation expectations are managed," he said, according to a primary dealer who attended the meeting. |
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| Reddy also said that India can't blindly ape other central banks in managing inflation because the local economy had its own specifics. |
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| "They (RBI) said that we have become an emerging economy from a non-market economy and have not yet become a market economy like the US," said CES Azariah, chief executive officer of FIMMDA. |
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| Market officials, who met Reddy, urged the central bank to synchronise the settlement of repo deals in the market and repo deals with the RBI. |
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| Currently, the Clearing Corporation of India settles the market deals at the end of the trading day, while the RBI repo deals are settled on a real-time basis. The market players urged the central bank to finalise the norms for interest rate derivatives and launch credit derivatives. |
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