India's record forex war chest set for Fed rate hike test

Mumbai

CHASTENED by a tumble in the rupee in 2013 at the prospect of tighter US monetary policy, India has built up record foreign exchange reserves of nearly US$340 billion to insulate the economy from capital flight as the United States prepares to lift interest rates.

Reserve Bank of India (RBI) governor Raghuram Rajan has long warned of the risk to emerging economies when the US Federal Reserve makes the first rise in its zero per cent interest rates since the 2008 financial crisis.