India should let exchange rate move as ‘first line of defence’ in ongoing shock, IMF official says
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- ✓Krishna Srinivasan, director of the IMF’s Asia and Pacific Department, said India should let the exchange rate move as the first line of defence against shocks.
- ✓“Our advice to countries is to use the exchange rate as the first line of defence,” he said at a Mumbai media briefing.
Story at a Glance
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- MARKET
- Reported By
- Financial Express
- Reading Speed
- 3 Minute(s)
- Market Focus
- India Economy
Krishna Srinivasan, director of the IMF’s Asia and Pacific Department, said exchange rates should act as the first line of defence when economies face external shocks.
“Our advice to countries is to use the exchange rate as the first line of defence amid ongoing shocks,” Srinivasan said at a media briefing in Mumbai. “We would advise India to let the exchange rate move.” The Reserve Bank of India (RBI) has taken several steps to support the rupee.
These include selling dollars from its foreign exchange reserves, opening a special window to supply dollars to oil companies and requiring banks to set aside cash against certain foreign exchange transactions. The rupee fell close to record lows earlier this month but recovered around 2% after the central bank introduced these measures.
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