To bolster the value of the rupee, we had to give investors more certainty that future inflation would be low. After all, it was primarily India’s higher inflation with respect to the rest of the world that led to periodic abrupt falls in rupee value.
I am heartened, I might add, by what seems to be the fact that US bank risk-management skills paid large dividends - although clearly not avoiding all losses - in the Asian financial crisis a couple of years back. A major reality of financial institutions is that their businesses are ultimately built on understanding and trust by both retail consumers and wholesale counterparties.