RBI under scrutiny as rupee rises

There are a number of possible explanations for the recent rise in the rupee, including a lack of sterilisation instruments, the magnitude of privatisation inflows, or a change in RBI FX policy. It is difficult to pin down the reason for the move but at this stage we see it as an aberration, not a shift in policy.

The RBI does not have a formal target for either spot dollar/rupee or the real effective exchange rate (REER) and based on our analysis of India’s balance of payments, the REER should

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