The International Monetary Fund (IMF) has reclassified India’s “de facto” exchange rate regime to “stabilized arrangement” from “floating” for December 2022 to October 2023.
Key points
- This is the first such instance of such reclassification following an article IV review of the country’s policies.
- According to the IMF’s staff assessment, forex intervention by the RBI likely exceeded levels necessary to address disorderly market conditions and has contributed to the rupee-dollar moving within a narrow range since December 2022.
- The IMF’s article IV consultation report reviews a country’s current and medium-term economic policies and outlook.
- India has strongly disagreed with IMF’s staff assessment, saying that such a view is “incorrect” and “unjustified”.
- The IMF classifies an exchange rate regime as a stabilized arrangement when it determines that the exchange rate has not moved beyond a 2% band in 6 months.
