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Macronomics: The Story of the FCNR Swap and Why It Will Haunt Us In 2016

This is a story that's purely fiction, and figments of my imagination. There are certainly elements linked to living people, but none of the following conversations actually took place in the same way I mention them.

It was a humid day. That silly Fed, thought Subbarao. Why did they have to create this massive mountain of money that kept oozing into India, and suddenly decide it was time to stop? What he was hearing was incredulous - that the Fed would stop QE, that money would move out of India in a sudden swoosh, soon. That couldn't be allowed to happen. This had prompted a meeting of the RBI board, immediately. They had initiated a mega-operation to squeeze out liquidity in the face of exiting FIIs.

"What's the situation?", asked Subbarao.

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