Saying that the country needs to build forex reserves to protect the economy from surge in outflows, Former RBI Governor Raghuram Rajan said the US Treasury should not label India as a “currency manipulator”. Rajan who is presently a professor at University of Chicago Booth School of Business, further said India needs to build reserves in order to protect against outflows, as it cannot keep running to the IMF for help as a large country and also it is very difficult politically.
Rajan told this during an interview to CNBC. In recent reports the US Treasury had said it would be monitoring India’s foreign exchange reserves and economic policies.
Economic Times has quoted Rajan as saying “We need our own reserves, so reserves should be seen as macro prudential tool. Its only when you are holding exchange rate at the grossly undervalued level and nobody could accuse India of doing that,” Rajan said.
Rajan claimed that India’s exchange rate is “very healthy” valued and in fact some people say it is overvalued. He said you can’t label a country currency manipulator looking at one number. He further revealed that India has foreign exchange reserves of about USD 400 billion.