Rbis Eefc Step Was Unwarranted

A deficit on both current and capital accounts during the relevant period put pressure on rupee, writes A V Rajwade

The compulsory conversion of half the EEFC balances into rupees is now over. Media reports convey that the total amount so far converted was of the order of $850 million. The point that arises is whether the step was necessary given that Reserve Bank of India still has reserves in excess of $33 billion. Perhaps the best comment on the subject has come from Sudhir Mulji in his column in this paper which appeared last Thursday.

To quote Mulji