I find it sad that FX intervention has to be reached for in India. When reserves are finite, and the numbers are in the public domain, it is very difficult to see this strategy working successfully on its own. Intervention can really only be justified as a viable option when it can buy time for the fundamentals that are causing the selling, to change; but, the authorities are under huge pressure to ramp up their response to the crisis, and their options are limited. OR… you could hopefully have a repeat of the Swiss episode – and get plain lucky !

Sometimes, the rush and clamour to join the exclusive club of full convertibility can, for a still emerging nation, be a poison chalice. India has joined this race, and only some restrictions on the capital account remain. Unfortunately, the fragility of the economy to such an onslaught as is happening now is all too plain.

There will be those who will say, with some justification – how can a bunch of currency speculators be allowed to make money – at the expense of setting back a sovereign nations progress by a considerable margin. This has always been fertile ground for discussion. On balance, although I see the simple appeal of that argument, a convertible currency is like a constant audit. The assessors are external forces who judge the wisdom of government policy by their willingness to invest – but they can also be the harshest of critics!