Financial Markets and the Economy - Intersections

(This article appeared in ET on November 28, 2018, URL below: https://economictimes. indiatimes.com/news/economy/ policy/the-reserve-bank- versus-government-saga-in- search-of-core-solutions/ articleshow/66834380.cms?utm_ source=ETMyNews&utm_medium= HPMN&utm_campaign=AL1&utm_ content=20  ) The RBI versus government saga - in search of core solutions  The last few months have been busy for our financial ecosystem, for the wrong reasons.  RBI folk have been busy penning and delivering caustic speeches that leave little to the imagination about what they think of Delhi. For its part, Delhi has been busy delivering its counter-narrative through tweets, sound bites, and by complaining about Mint Street to whoever cares to listen.    Commentators like me have been busy gleefully churning articles on what we think is the latest score. Much of this is quite pointless though – the underlying disagreements and implications are serious and re

The following article appeared on CNBC TV18 online on October 4, 2018 https://www.cnbctv18.com/ views/rbi-monetary- policy - credible-tight-monetary- policy -isnt-currency-defense- to-draw-in-more-flows-989631. htm Currency, banking and finance – in search of the right policy mix Taking Stock The powers-that-be in Delhi & Mumbai are in an unenviable spot.   The global context is gloomy. Brent crude oil has moved well past $80. Global central banks are withdrawing monetary accommodation. The impact of Iran sanctions, trade wars and populism are still playing out. Analysts are (predictably) warning of worse to come. This brings our financial stability vulnerabilities into sharp focus. First, the imbalance in our currency market persists. Our current account deficit (CAD) could balloon beyond $80B this year, even as the large open positions in rupee, built up by our high real rates of the past, nervously ponder the exit door. Second, our