Indian Economy

Relative cyclic positions of

USD and Euro

|KEY POLICY RATES |PREVIOUS RATES |REVISED RATES |

|Bank Rate |6% |6.00% |

|Repo Rate |7.75% |7.75% |

|Reverse Repo Rate |6.00% |6.00% |

Repo rate unchanged at 7.75%

Reverse repo rate unchanged 6%

Bank rate unchanged at 6%

Cash reserve ratio changed to 7.75 per cent

|RESERVE |PREVIOUS RATES |REVISED RATES |

|RATIO | | |

|CRR |7.5% |7.75 |

|SLR |25% |25% |

Using Vanilla Model Acceptance of Euro by number of other countries

Using Keynesian Model

Changes with respect to

Federal Policy

Primary Issue

The primary issue discussed in the case is the depreciation of dollar against the world currencies and its impact on Indian economy. In this report, we would discuss the mitigation policies followed by the RBI for the curbing of adverse impact that such a situation may have on the Indian economy.

Objectives of RBI:

• As monetary authority to formulate, implement and monitor the monetary policy in order to maintain price stability and ensuring adequate flow of credit to productive sectors.

• Regulating and supervising of the financial system by prescribing broad parameters of banking operations within which India's banking and financial system functions in order to maintain public confidence in the system, protect depositors' interest and provision of cost-effective banking services to the public.

• As a manager of foreign...