Successive years of uncertainties intensified by events beyond the control of central banks have increasingly blurred visibility. Central banks have to constantly chart a safe way forward in this world of unexpected twists and turns of events.
Five years ago, substantial capital outflows triggered by a loss of confidence in the rupee had brought down the foreign reserves of the Bank of Mauritius to unacceptable levels. The rapid weakening of the Euro in the international exchanges following its introduction in January 1999 translated into a significant appreciation of the rupee.