News Brief
India Challenges IMF's Critique Of Forex Intervention, Disputes 'Excessive' Rupee Influence Claims
The IMF logo.
India has dismissed the International Monetary Fund's (IMF) claim that the Reserve Bank of India's (RBI) foreign exchange intervention was excessive, countering allegations of manipulating the rupee's value.
The IMF had reclassified India's forex regime from "floating" to a "stabilized arrangement," citing RBI intervention beyond what was deemed necessary for market stability.
However, India strongly rejected this assessment, asserting it was unjustified.
As reported by NDTV, during the period from December 2022 to October 2023, the rupee saw a 2 per cent depreciation against the dollar, prompting an estimated $78 billion intervention by the RBI.
Despite India's FX reserves nearing a record high, officials concerned with the matter emphasise the RBI's role in volatility management rather than targeting a specific rupee level.
The dispute underscores India's sensitivity to potential US Treasury scrutiny, though it hasn't been on the currency manipulator watchlist since November 2022.
Meanwhile, analysts suggest the RBI may ease control over the rupee in 2024, aligning with the anticipated dollar weakening and strengthening of peer currencies.
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