💎 Fed’s first rate cut since 2020 set to trigger market. Find undervalued gems with Fair ValueSee Undervalued Stocks

Unfolding global developments poses risks to Indian economy, says RBI

Published 03/17/2022, 07:28 AM
Updated 03/17/2022, 11:05 AM
© Reuters. FILE PHOTO: A Reserve Bank of India (RBI) logo is seen at the gate of its office in New Delhi, India, November 9, 2018. REUTERS/Altaf Hussain

By Nupur Anand

MUMBAI (Reuters) - India's macroeconomic fundamentals remain strong but the unfolding global developments pose downside risks in terms of spillover, the Reserve Bank of India said in its monthly bulletin on Thursday.

"The ongoing geopolitical crisis has heightened the uncertainty clouding the global macroeconomic and financial landscape even as the world economy struggles to recover from the pandemic," the RBI wrote, adding that the uncertain economic outlook has increased risks to emerging economies.

Even though India is making steady progress on the domestic front, the spiralling oil and gas prices and unsettled financial market conditions also pose fresh headwinds to the still incomplete global recovery, it observed.

The RBI also said that a rapid and large withdrawal of fiscal support risks pushing the economy over the cliff into a sharp downturn.

"Exiting policy makers have to contend with the razor’s edge trade-off between cliffs and ramps," RBI added.

It has continued with the accommodative stance even as inflation has inched up and had left the key lending rate unchanged, keeping it at record lows in the last central bank policy announcement held in February.

RBI once again highlighted the risks emanating from virtual currencies and noted that crypto technology is underpinned by a philosophy to evade government controls and threaten the financial sovereignty of a country and make it susceptible to strategic manipulation.

© Reuters. FILE PHOTO: A Reserve Bank of India (RBI) logo is seen at the gate of its office in New Delhi, India, November 9, 2018. REUTERS/Altaf Hussain

"They can (and if allowed most likely will) wreck the currency system, the monetary authority, the banking system, and in general government’s ability to control the economy," RBI wrote.

Last month, the central bank had delivered a stark warning against investing in cryptocurrencies and had compared it to Ponzi schemes, adding that they should be banned.

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.