RBI Deputy Governor Urges Emerging Markets to Cut External Debt
Poonam Gupta urged emerging markets to strengthen domestic finances to reduce dependence on volatile foreign capital flows.
Reserve Bank of India Deputy Governor Poonam Gupta called on emerging markets to strengthen domestic finances and build buffers to mitigate the impact of volatile foreign capital. Speaking at an event in Mumbai, Gupta characterized external flows as "fickle" and urged nations to reduce their macro-dependence on external financing.
The warning follows a period of weakening capital inflows for India in the year ending March, which required the use of foreign-exchange reserves to cover the external deficit. The Indian rupee has faced significant pressure this year, dropping more than 5.5% and hitting a record low of nearly 97 per dollar earlier this month before recovering to approximately 95.20.
In response to these pressures, the Reserve Bank of India has implemented measures to curb currency speculation and attract foreign inflows, specifically targeting India's diaspora.
