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Preference asymmetry and international reserve accretion in India

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  • Naveen Srinivasan
  • Vidya Mahambare
  • M. Ramachandran

Abstract

Reduced-form estimates of the Reserve Bank of India's (RBI) first-order condition indicate that its preferences have been asymmetric with respect to exchange-rate management, with the response to the rate of rupee appreciation being relatively larger than to the rate of rupee depreciation of the same magnitude. This behaviour is shown to account for a sizable fraction of reserve accretion in recent years.

Suggested Citation

  • Naveen Srinivasan & Vidya Mahambare & M. Ramachandran, 2009. "Preference asymmetry and international reserve accretion in India," Applied Economics Letters, Taylor & Francis Journals, vol. 16(15), pages 1543-1546.
  • Handle: RePEc:taf:apeclt:v:16:y:2009:i:15:p:1543-1546 DOI: 10.1080/13504850701578942
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    1. Leigh Andrew, 2007. "Intergenerational Mobility in Australia," The B.E. Journal of Economic Analysis & Policy, De Gruyter, pages 1-28.
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    Cited by:

    1. S. Rajan, Ramkishen, 2010. "The Evolution and Impact of Asian Exchange Rate Regimes," ADB Economics Working Paper Series 208, Asian Development Bank.
    2. Sen Gupta, Abhijit & Sengupta, Rajeswari, 2013. "Management of Capital Flows in India: 1990-2011," MPRA Paper 46217, University Library of Munich, Germany.
    3. Peter J. Morgan, 2011. "Impact of US Quantitative Easing Policy on Emerging Asia," Macroeconomics Working Papers 23215, East Asian Bureau of Economic Research.
    4. Srinivasan, Naveen & Kumar, Sudhanshu, 2012. "Zone-quadratic preference, asymmetry and international reserve accretion in India: An empirical investigation," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 22(2), pages 253-263.
    5. Rajan, Ramkishen, 2011. "Management of Exchange Rate Regimes in Emerging Asia," ADBI Working Papers 322, Asian Development Bank Institute.
    6. Pontines, Victor & Siregar, Reza Y., 2012. "Fear of appreciation in East and Southeast Asia: The role of the Chinese renminbi," Journal of Asian Economics, Elsevier, pages 324-334.
    7. Victor Pontines & Reza Y. Siregar, 2012. "Exchange Rate Asymmetry and Flexible Exchange Rates under Inflation Targeting Regimes: Evidence from Four East and Southeast Asian Countries," Review of International Economics, Wiley Blackwell, vol. 20(5), pages 893-908, November.
    8. Pontines, Victor & Rajan, Ramkishen S., 2011. "Foreign exchange market intervention and reserve accumulation in emerging Asia: Is there evidence of fear of appreciation?," Economics Letters, Elsevier, vol. 111(3), pages 252-255, June.

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