........... I have always been of the view that you cannot look at reserve accumulation as a policy in isolation. It is part of a larger macro stability agenda. The role of exchange rate in that overall strategy is very important. Typically reserve accumulation is an expansionary stance because you are pumping in domestic liquidity when you buy dollars. If you are in an anti-inflationary stance, which is what the Reserve Bank is in, the accumulation of reserves is inconsistent of that stance. It is not that it cannot be done, but it has to be carefully thought through both in terms of.......
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