The net foreign exchange assets of the Reserve Bank of India (RBI) surpassed the level of reserve money last month, thereby creating a currency board situation.
The Economic Survey has indicated that the strengthening of balance of payments has impacted the monetary sector with net foreign exchange assets of the RBI emerging as an important source of reserve money.
From 9.1 per cent at the end of March 1991, the share of net foreign exchange assets in reserve money had reached 78.1 per cent by the end of 2001-02 and to 100.7 per cent as on January 24. This is close to a currency board situation, the Survey says.
In the same way, the net foreign exchange to currency ratio increased in stages
