for resolution flagged. i had started my talk hoping that the aftermath of this conference would be better than last time when the rbi had to impose many restrictions to curb volatility. in the recently released report of the technical committee on services / facilities for the exporters, the entire gamut of existing facilities to the exporters were reviewed and several recommendations made for the improvement of services / facilities to the sector. in this regard, policy measures were also suggested for risk mitigation for the exporters including use of hedging instruments. in the backdrop of the committee ’ s report, i would like to make the following announcements. 30. we have decided in principle to relax a few things that we hope will cheer the market. the facility of rebooking of cancelled contracts is being increased from the present limit of 25 percent to 50 percent and made symmetrical for both exporters and importers. the committee had noted that hedging process in the otc market involves tedious documentation. the committee was of the view that the quarterly duration for declaration of forward contracts booked by the exporter and certified by statutory auditor may be replaced with a quarterly self certified declaration by the exporter and an annual statutory auditor certified declaration. this recommendation has also been accepted for implementation. further, the documentation for booking of forward contracts upto usd 200, 000 is also being simplified. let me hasten to add that these facilitations have nothing whatsoever to do with rbi ’ s perception about the exchange rate as some of practitioners had reportedly believed / stated when we relaxed the restriction on net open position limits of banks. reserve bank will continue to manage the exchange rates as hitherto, targeting on curbing excessive volatility rather than any specific levels. 31. thank you for your attention and wish you all the best as you return to the jobs you best know after this seminar. bis central bankers ’ speeches

’ s approach has been that has been “ too little, too late ”. i would submit that the test of this is yet to come. it is well - known that monetary policy acts with a lag. it could be anywhere between 6 and 12 months, even longer before demand side pressures abate in response to an action. given this, actions taken during january – july 2010 should start to show their impact on inflation over the next 6 to 12 months. the fact that the non - food manufacturing inflation rate went up sharply during the first half of the year is in and of itself cannot be attributed to the absence of monetary actions during this year. to address that, actions would have had to be taken in the second half of 2009. but, at that point even the domestic recovery was at best in its early stages and its trajectory was quite uncertain. an anti - inflation stance in those conditions would have been rather risky. finally, as i have already mentioned, an important lesson from the crisis was the critical role of liquidity in the financial system in maintaining economic stability. the policy approach over the past few months has been very conscious of the need to balance the exit from an abnormally high liquidity situation, which the response to the crisis created with the current liquidity requirements of both the public and private sectors. conclusion to conclude, the management of current inflation requires both supply - side and demand - side approaches. monetary policy has addressed the latter with a gradual, calibrated set of actions on both interest rates and liquidity management. the pace and sequencing of the actions has been influenced by both persistent global uncertainties and the need to support the domestic recovery. this has required a balancing act between reining in inflationary expectations and adequate liquidity in the domestic financial system. while the current rate of inflation is a legitimate concern, the results of this policy stance should become visible over the next few months.