In a recent article published in Business Line, Mr. M.Y. Khan (Chairman of the Inter-Connected Stock Exchange of India Ltd.) analyzed the currency and gold revaluation account (CGRA) and contingency reserves (CR) of RBI. CGRA is used to meet the fluctuations in foreign exchange assets and the price of gold; CR enables the RBI to absorb unexpected and unforeseen contingencies.
Both these accounts have declined significantly (as a percentage of total assets) during the last 3 years and RBI needs to take remedial steps to maintain these accounts. The article can be accessed here
Thursday, October 18, 2007
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