of foreign exchange held by residents, individuals as well as institutions, in mauritius amounts to rs80 billion. these are official figures. the actual figure could be much more than rs80 billion. anyway the known stock of foreign currencies held by residents and the bank of mauritius account for 60 per cent of the rupee deposit liabilities in the financial industry. there should not be such a shortage of foreign currencies unless some players are intentionally holding back their foreign currency receipts with a view to making speculative gains. indeed, exporters are holding on to their export proceeds. one may argue that it is rational behaviour. rational action in economics does not imply that all actors have the same information, the same insight, the same experience and purposes. moreover, the fallacy of composition brings about from time to time that individual actors all act rationally but in combination produce an irrational result, such as spectators of a soccer match standing to get a better view as spectators of sport or theatre goers running for the exit in the event of a fire. the irrational result thus produced could defeat policy efforts being made to restore both internal and external balances in the economy. the projected substantial reduction in the size of the current account deficit is already a positive sign that quite some progress has been made in the correction of external imbalance. the exchange rate of the rupee has gone down to a level that is impacting on the rate of growth of imports. the exchange rate of the rupee has sufficiently borne the brunt of adjustment. enough is enough. speculators are warned. ideally a competitive market, be it for goods and services or for financial services or foreign exchange, serves best the interest of an economy when all conditions for healthy competition are met. perfect competition requires that no single or a limited group of sellers or buyers on the market is powerful enough to dictate prices. in the domestic foreign exchange market we have observed a few powerful sellers of foreign currencies dictating the prices. they defy the rules of competition. it is true that from adam smith to marshall and pigou a hundred years later and still later, joan robinson and e. h. chamberlain, economists underlined circumstances in which competitive laissezfaire would not produce maximum efficiency. their simplified leading ideas became widely absorbed as laissez - faire ideology. the technical qualifications that vitiate laissez - faire in many real world situations, though extremely important, were disregarded. the ph

a repo rate depending on the evolution of the domestic money market. we have since studied a framework that would best meet the specificities of our banking industry. the key rate of interest in the new monetary policy framework will be the repo rate for signaling the bank ’ s monetary policy stance. basically the repo rate will be the rate at which the bank will intervene on the overnight inter - bank market to supply or absorb liquidity. as lender of the last resort, the bank will continue to provide collateralized overnight advances to banks under a new standing facility. the rate of interest thereon will be above the repo rate. the operation of the new monetary policy framework will enable the bank to conduct monetary management more effectively than the present framework. in the new framework the bank will be guided by the objective of achieving and maintaining low and stable inflation in the medium and long term without jeopardizing growth prospects. monetary policy is doing its job. fiscal policy is doing its best. growth of imports is decelerating. the current account deficit is projected to contract by over 50 per cent. signs of a restoration of external balance are positively emerging. barring any major setback, the rate of inflation is forecast to decline to marginally below 5 per cent by the end of the next fiscal year. do not overplay on the domestic foreign exchange market. i repeat do not push the authorities against the wall. many of us, particularly those outside the business sector, do not seem to really grasp what the struggle for economic survival in an era of globalization imposes on us all. the story of the lion and the gazelle in the jungle is worth recalling. every night the lion goes to sleep bearing in mind that when the sun rises the next morning if it cannot outrun the slowest gazelle it will go hungry for the day. every night the gazelle goes to sleep bearing in mind that if it does not run fast enough when the sun rises the next morning the fastest lion will have it for breakfast. one thing both the lion and the gazelle know : when the sun rises the next morning they had better start running. this is a struggle for economic survival that cannot be met with success should we, in the day - to - day management of institutions and enterprises, stick to old moulds of thinking. someone said it at the world economic forum in davos that we have moved from a world where the big eat the small to a world where the fast eat the