Noting that India was not insulated from global developments like the downgrade of the US, the Reserve Bank today said it was closely monitoring the situation and would continuously assess the impact on the Indian economy and financial markets.
The RBI also said the entire policy and regulatory framework of the country must be "prepared to respond to turbulent financial market conditions arising out of external developments".
"Developments relating to the US economy last week have significantly increased uncertainty about its prevailing condition," the RBI said in a statement.
"The Reserve Bank is closely monitoring all key indicators and will continuously assess the impact of global developments on rupee and forex liquidity and macroeconomic stability. We will respond quickly and appropriately to the evolving situation," it added.
The US lost its top-notch 'AAA' rating this weakened and the development has further added to the worries of global markets, already grappling with the debt crisis in Europe.
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