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India bulks up against outflows as Fed, virus risks threaten repeat of 2013

Asia's third-largest economy has bad memories of past attempts by the Federal Reserve to get away from crisis-mode policies, particularly in 2013 when mere talk of "tapering" stimulus prompted the rupee to sink to record lows.

June 28, 2021 / 03:11 PM IST

India's $600 billion in reserves should help it fight market volatility from any US monetary tightening, but analysts and traders warn a slowing economy and an expanding fiscal deficit still make it particularly vulnerable to capital flight.

Asia's third-largest economy has bad memories of past attempts by the Federal Reserve to get away from crisis-mode policies, particularly in 2013 when mere talk of "tapering" stimulus prompted the rupee to sink to record lows.

Now, with the Fed again giving increasing thought to when it will need to reduce stimulus, India's rupee is back under pressure, having fallen 1.8 percent over the past four weeks.

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