Global financial giant Citigroup has ranked India as the second-most vulnerable Asian economy after Thailand, while terming dragon economy China as the most resilient to external uncertainties.
“Citi’s Vulnerability Index points to China and Taiwan as the most resilient and India and Thailand as the most vulnerable in the face of external uncertainties,” it said in a report called Asia Macro Views.
The report said external flow risks were important for macroeconomic stability. Further intensification of the US financial crisis and tightening of the global liquidity would hit economies, including India, the most, it said.
At the moment, however, the most relevant risks for Asian economies and markets were liquidity problems, it said.
Following the policies in major global economies, the Reserve Bank of India acted to ease liquidity controls or to inject liquidity into the system, it said. However, these were not likely to inoculate Asian economies from the financial flow risks, it added.
Earlier during the week, the RBI cut the rate of mandatory deposits that commercial banks need to park with it. The cash-reserve ratio will come down to 8.5 per cent from October 11 and this move would release about Rs 20,000 crore into the financial system, the RBI had said in a statement.
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