What to do with $120bn of reserves?

In yet another attempt to figure out what to do with the problem of plenty, the Telegraph suggests lowering domestic interest rates.

This is an archived blog post from The Acorn.

The short point is that the interest rate differential permits arbitrage, of the non-resident Indian variety or otherwise, stimulates dollar inflows and triggers rupee appreciation. The answer lies not in declaring arbitrage illegal, although special treatment to NRIs should stop, but in removing the root of the problem — high domestic interest rates [The Telegraph]

Lower domestic interest rates also help spur investment in the economy and generate employment. Accomplishing this requires a stable government strong enough to overcome the fears of pensioners and other domestic savers who watch lowering interest rates with some fear.

If you would like to share or comment on this, please discuss it on my GitHub Previous
Study shows Indian AIDS drug is a winner Next
Bangladesh resists joint border patrols