of india, which commenced its operations in 2003, has helped in significantly enhancing the efficiency and security of settlement system for government, money market and forex market. as far as over - the - counter ( otc ) derivative products are concerned, significant progress has been made in the recent past. in 2012, trade repository became operational in india when reserve bank of india advised that all / selective trades in otc foreign exchange and interest rate derivatives between the banks / market makers ( banks / primary dealers ) and their clients should be reported on the ccil platform subject to a mutually agreed upon confidentiality protocol. the reporting arrangement covering otc foreign exchange derivative trades between authorised dealers ( ad ) banks and their clients has now been fully operationalised. bis central bankers ’ speeches forex market movements the forex market conditions have generally remained orderly with intermittent episodes of volatility in the past two decades on account of external or internal factors or a combination of both. the day - to - day movements in the exchange rate of the rupee are market determined, i. e., determined by forces of demand and supply. india ’ s approach to exchange rate management has been to avoid volatility without targeting any level. the emes ’ experience, in general, in the past two decades has highlighted the growing importance of capital flows in determining the exchange rate movements as against trade flows in the 1980s and before. an issue of paramount significance in this context is the volatility in capital flows to emes including india. in the aftermath of global financial crisis of 2008 and more recently after chairman bernanke ’ s testimony in may 2013 about the possibility of quantitative easing ( qe ) tapering, managing exchange rate volatility in emes like india has been rendered more challenging, in the background of volatile capital flows. india ’ s response to taper tantrums as i mentioned above, india, like most other emes, is facing the challenges associated with volatile capital flows and is susceptible to shifts in risk appetite of international investors on account of external developments completely exogenous to whatever happens in the country. this was amply demonstrated during the may - august 2013 episode of taper tantrums. the mere hint by chairman bernanke about possibility of an early qe - tapering led to an exodus by the fiis, especially in the debt segment. the rupee went into a tailspin and depreciated sharply by over 19 per cent, touching a historic low of

deepak mohanty : investment and its financing – what causes private investment to remain relatively low in asia? welcome remarks by mr deepak mohanty, executive director of the reserve bank of india, at the asia - europe meeting ( asem ) conference on “ investment and its financing : what causes private investment to remain relatively low in asia? ”, mumbai, 16 december 2010. * * * 1. mr. peter bekx, director, european commission. mr. subir gokarn, deputy governor. mr. moreno bertoldi, head of unit, european commission. ms. valerie rouxellaxton, head of sector, european commission. distinguished representatives from the asem member countries. esteemed colleagues of central banks, representatives from multilateral organisations, think - tanks and academia, distinguished experts and friends. i am really privileged to have this pleasant opportunity of welcoming you all on the occasion of asem conference on behalf of the reserve bank of india and on my own behalf. i understand that this is the first asem conference of european commission in india. i thank the european commission for this opportunity. 2. i am indeed honoured to welcome you all to this lovely city of mumbai. as some of you may be aware, mumbai has a unique place in indian history and commerce. mumbai, built on seven islands, was the first british indian possession. mumbai came as a part of the royal dowry in 1661 to king charles ii of england on his marriage to the portuguese princess. it was later leased to the east india company for £10. today you can ’ t get even a square inch of land in mumbai for that price. today mumbai is one of most expensive cities in the world. mumbai is the business capital of india and handles major share of india ’ s commerce. it houses the headquarters of many major banks, financial institutions, insurance companies and stock exchanges. mumbai ’ s nature as the most eclectic and cosmopolitan indian city is symbolized in the presence of bollywood within the city, the centre of the globally - influential hindi film and tv industries. the city has valiantly faced many setbacks and kept up its vibrancy. that is what mumbai is! be that as it may, i am sure, you will get an opportunity during your stay to go around the city and experience for yourself the brisk life of mumbai. the marine drive which is just opposite this hotel is popularly known as queen ’ s necklace which you could see from the rooftop where we will have our dinner