The net international investment position (IIP) of the country has also been deteriorating in recent years – international liabilities exceed international assets by about $ 309.4 billion in March 2013 as against $ 250 billion in March 2012, though some improvement has been observed with net liabilities at $ 296.9 billion in June 2013. 5.
But it is easy to see that these buffers also provide some margin to cushion the adjustment if average real rates were to increase in the future. In this way, short-term prudence also supports long-term prudence. What does it all mean for policy?