Energy crisis: IMF advocates exchange rate flexibility of rupee to counter oil shock

The West Asia conflict has created an unprecedented energy shock for the Indian economy which has put the rupee under extreme pressure against the US dollar. There is suspicion that RBI spent a huge amount in the past few weeks trying to shore up the value of the Indian currency.

Kolkata: Exchange rate flexibility should be the policy response to help the Indian economy adjust to energy shocks, an IMF (International Monetary Fund) director has said. “Our view is that the rupee should be the first line of defence in the face of these shocks. So, allowing the exchange rate to move freely to reflect the impact of these shocks is important to help the Indian economy adjust to the shocks,” IMF Communications........

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