In reflection, the foreign exchange reserves have gone up by nearly US $ 23 billion during April-July 20, which is already nearly half of the entire reserve accretion during the year 2006-07. By current indications, managing capital flows and consequently, liquidity will be the main challenge facing monetary policy in 2007-08.
(b)  Global developments  The key change in the global outlook between April and July is the upward revision by the IMF in global growth forecasts for 2007 and 2008 from 4.9 per cent to 5.2 per cent.