Intervention in Foreign Exchange Markets: The Approach of the Reserve Bank of India

8 Pages Posted: 6 Oct 2014

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Reserve Bank of India

Government of India - Reserve Bank of India

Date Written: October 2013

Abstract

The exchange rate of the rupee is determined largely by the market forces of demand and supply. The Reserve Bank of India has intervened occasionally to maintain orderly conditions and curb excessive volatility in the foreign exchange market. Being a current account deficit country, India is dependent on capital flows for financing the current account deficit. Given the dependence on volatile capital flows, there may be a case for augmenting forex reserves when the situation permits without any bias for a particular exchange rate band.

Full publication: Market Volatility and Foreign Exchange Intervention in EMEs: What Has Changed?

Keywords: capital flows, exchange rate, intervention, foreign exchange reserves

JEL Classification: F32, F310

Suggested Citation

India, Reserve Bank of, Intervention in Foreign Exchange Markets: The Approach of the Reserve Bank of India (October 2013). BIS Paper No. 73l, Available at SSRN: https://ssrn.com/abstract=2473998

Reserve Bank of India (Contact Author)

Government of India - Reserve Bank of India

Bakery Junction Service Road
Vazhuthacaud
Thiruvananthapuram, Kerala 695033
India

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