The Indian currency regime and its consequences

Ila Patnaik

Working Papers from National Institute of Public Finance and Policy

Abstract: While the Indian rupee is claimed to be a `market determined ex-change rate', there is a gulf between the de facto and de jure exchange rate regime. An examination of the data reveals that India has a de facto rupee-dollar pegged exchange rate. From the early 1990s on- wards, as India as reintegrated with the world economy, the implementation of this pegged exchange rate has induced increasing monetary policy distortions. The volatility of the rupee-dollar rate has sub-stantial variation which have considerable implications for economic agents in understanding currency risk and monetary policy. However these changes in course have not been preceded by announcements from RBI.

Keywords: Money (search for similar items in EconPapers)
Pages: 13
Date: 2007-06
Note: Working Paper 49, 2007
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Citations: View citations in EconPapers (5)

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Working Paper: The Indian Currency Regime and its Consequences (2007)
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