HOME > MARKETS > ECONOMY NEWS
  ECONOMY NEWS
ECONOMY
Exchange rate flexibility should be preferable policy response to help rupee adjust to energy shocks: IMF
Oct-30-2026

The International Monetary Fund (IMF) has said that exchange rate flexibility should be the preferable policy response to help the Indian economy adjust to energy shocks, amid reports of significant intervention by the Reserve Bank of India (RBI) to support the rupee. According to reports, the RBI had used about $90 billion since June this year to prop up the rupee, including through sales to the spot market and currency swaps to absorb surplus liquidity. 

IMF Communications Director Julie Kozack said the IMF would recommend monetary policy tightening to preserve price stability if rupee depreciation started to feed into inflation. She said ‘If significant rupee depreciation leads to broad-based increases in inflation, then our advice would be that monetary policy tightening could be considered to preserve price stability, that is, if depreciation starts to feed into inflation.’

She said that more generally, foreign exchange intervention can be appropriate when market conditions become disorderly, which would be consistent with the IMF's integrated policy framework. She said ‘but in the case of India, our view is that exchange rate flexibility remains the preferable policy response.’


  RELATED NEWS >>