ISSN (Print) - 0012-9976 | ISSN (Online) - 2349-8846
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Hands-off Policy on the Exchange Rate

Since the late 1990s, India's exchange rate policy has been one of minimising the volatility and at the same time maintaining a healthy level of foreign exchange reserves to guard against risks. The Reserve Bank of India's interventions in the market have been by and large guided by these twin concerns. Since August 2009, however, the RBI appears to have followed a hands-off policy and has hardly intervened in the market. What has guided this new approach and what are the implications for the real value of the rupee? And under what circumstances is this policy likely to change?

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