India is quickly becoming a major force on the foreign exchange reserve scene.  While India doesn’t fix its currency to the USD like China does, it still removes most foreign currency from circulation in order to mitigate against inflation.  As a result, its reserves have ballooned to nearly $300 Billion, having increased by $100 Billion this year alone.  India will now be faced with the same decisions that many other forex reserve hogs have been forced to reckon with, namely how to allocate its reserves. While India hasn’t weighed in prominently on the issue as China has, analysts will be watching closely.  The Economic Times reports:

Rate cut by the Fed in the US along with the positive perception prevailing about the emerging economies such as India has led to sharp rise in inflows, it said.

Read More: Forex Reserves to touch $300 bn by March 2008