External stability

New challenges can emerge in currency management

One of the most remarkable features of India’s economic management in recent years has been stability on the external front. This is important because India runs a current account deficit and depends on global savings. Although the recent tightening of global financial conditions because of a sharp and coordinated increase in policy rates by large central banks did create some pressure on the external front, the impact was contained and short-lived. In fact, the handling of external accounts over the past few years prompted many analysts to draw comparisons with the taper tantrum episode of 2013, which pushed India to