India's policy stance on reserves and the currency

Over the last decade, India engaged in substantial liberalisation on the current account and the capital account. At the same time, a fully articulated policy framework defining the currency regime is not known in the public domain. In this paper, we seek to characterise then ature of the currency regime, in the period after the Asian crisis. This is closely linked to better understanding the phenomenon of reserves accumulation of the recent years. Our results suggest that the main focus of the currency regime has been to deliver a low volatility of the nominal exchange rate. The rupee appears to be a de facto peg to the USD. In the last one year, reserves accumulation cannot be explained by insurance motivations; it seems to be a passive side effect of maintaining the currency regime

The Consequences of currency intervention in India

Currency management in India has focused on delivering low levels of currency volatility. In earlier years, the implementation of the currency regime was enabled by the presence of capital controls. In recent years, India has made much progress towards capital account convertibility. This paper closely examines India's experience with the implementation of the currency regime in two episodes: 1993-95 and after 2002. We argue that the implementation of the existing currency regime now induces distorted monetary policy and fiscal costs. These costs of implementing the currency regime need to be factored into the choice of currency regime

The Indian currency regime and its consequences.

While the Indian rupee is claimed to be a `market determined ex-change rate', there is a gulf between the de facto and de jure exchange rate regime. An examination of the data reveals that India has a de facto rupee-dollar pegged exchange rate. From the early 1990s on- wards, as India as reintegrated with the world economy, the implementation of this pegged exchange rate has induced increasing monetary policy distortions. The volatility of the rupee-dollar rate has sub-stantial variation which have considerable implications for economic agents in understanding currency risk and monetary policy. However these changes in course have not been preceded by announcements from RBI.Money

No scale SUGRA SO(10) derived Starobinsky Model of Inflation

We show that a supersymmetric renormalizable theory based on gauge group SO(10) and Higgs system {\bf {10 $\oplus$ 210 $\oplus$ 126 $\oplus$ $\overline{\bf 126}$}} with no scale supergravity can lead to a Starobinsky kind of potential for inflation. Successful inflation is possible in the cases where the potential during inflation corresponds to $SU(3)_C \times SU(2)_L \times SU(2)_R \times U(1)_{B-L}$, $SU(5)\times U(1)$ and flipped $SU(5)\times U(1)$ intermediate symmetry with a suitable choice of superpotential parameters. The reheating in such a scenario can occur via non perturbative decay of inflaton i.e. through "preheating". After the end of reheating, when universe cools down, the finite temperature potential can have a minimum which corresponds to MSSM.Comment: 6 pages, 2 figures, Replaced with version to appear in Phys Lett

On the mean number of 2-torsion elements in the class groups, narrow class groups, and ideal groups of cubic orders and fields

Given any family of cubic fields defined by local conditions at finitely many primes, we determine the mean number of 2-torsion elements in the class groups and narrow class groups of these cubic fields when ordered by their absolute discriminants. For an order $\cal O$ in a cubic field, we study the three groups: $\rm Cl_2(\cal O)$, the group of ideal classes of $\cal O$ of order 2; $\rm Cl^+_2(\cal O)$, the group of narrow ideal classes of $\cal O$ of order 2; and ${\cal I}_2(\cal O)$, the group of ideals of $\cal O$ of order 2. We prove that the mean value of the difference $|\rm Cl_2({\cal O})|-\frac14|{\cal I}_2(\cal O)|$ is always equal to $1$, whether one averages over the maximal orders in real cubic fields, over all orders in real cubic fields, or indeed over any family of real cubic orders defined by local conditions. For the narrow class group, we prove that the mean value of the difference $|\rm Cl^+_2({\cal O})|-|{\cal I}_2(\cal O)|$ is equal to $1$ for any such family. For any family of complex cubic orders defined by local conditions, we prove similarly that the mean value of the difference $|\rm Cl_2(\mathcal O)|-\frac12|{\cal I}_2(\cal O)|$ is always equal to $1$, independent of the family. The determination of these mean numbers allows us to prove a number of further results as by-products. Most notably, we prove---in stark contrast to the case of quadratic fields---that: 1) a positive proportion of cubic fields have odd class number; 2) a positive proportion of real cubic fields have isomorphic 2-torsion in the class group and the narrow class group; and 3) a positive proportion of real cubic fields contain units of mixed real signature. We also show that a positive proportion of real cubic fields have narrow class group strictly larger than the class group, and thus a positive proportion of real cubic fields do not possess units of every possible real signature.Comment: 17 page

Asia confronts the impossible trinity.

In this paper, we examine capital account openness and exchange rate flexibility in 11 Asian countries. Asia has made slow progress on de jure capital account openness, but has made much more progress on de facto capital account openness. While there is a slow pace of increase in exchange rate flexibility, most Asian countries continue to have largely inflexible exchange rates. This combination - of moving forward with de facto capital account integration without bringing in exchange rate exibility - has lead to procyclicality of monetary policy when capital flows are procyclical. The paper emphasises the case for a consistent monetary policy framework.

Why India choked when Lehman broke

India has an elaborate system of capital controls which impede cap- ital mobility and particularly short-term debt. Yet, when the global money market fell into turmoil after the bankruptcy of Lehman Broth- ers on 13/14 September 2008, the Indian money market immediately experienced considerable stress, and the operating procedures of mon- etary policy broke down. We suggest that Indian multinationals were using the global money market and were short of dollars on 15 Septem- ber. They borrowed in India and took capital out of the country. We make three predictions that follow from this hypothesis, and _nd that the evidence matches these predictions. This suggests an important role for Indian multinationals in India's evolution towards de facto convertibility.capital controls, global nancial crisis, Indian multina- tionals, de facto convertibility