ISSN (Print) - 0012-9976 | ISSN (Online) - 2349-8846

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Movements in the Exchange Rate

The new indices of nominal and effective exchange rates of the rupee have been thoughtfully constructed and have been expanded rather significantly in their scope and coverage. What stands out in the coverage is the very rapid expansion in trade with Hong Kong and China, with the latter turning out to be the largest source of India's imports. The most illuminating revelation is that through the divergent interventions and non-interventions, the Reserve Bank of India has succeeded in pursuing an exchange rate policy that has sustained the effective rate "around the benchmark" - truly a commendable feat despite having to shock the market occasionally with sharp interventions to curb the speculative proclivities of some dealers.

Trends in New Indices of Nominal and Effective Rates

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