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The Consequences of currency intervention in India

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  • Ila Patnaik

    (Indian Council for Research on International Economic Relations)

Abstract

Currency management in India has focused on delivering low levels of currency volatility. In earlier years, the implementation of the currency regime was enabled by the presence of capital controls. In recent years, India has made much progress towards capital account convertibility. This paper closely examines India's experience with the implementation of the currency regime in two episodes: 1993-95 and after 2002. We argue that the implementation of the existing currency regime now induces distorted monetary policy and fiscal costs. These costs of implementing the currency regime need to be factored into the choice of currency regime

Suggested Citation

  • Ila Patnaik, 2003. "The Consequences of currency intervention in India," Indian Council for Research on International Economic Relations, New Delhi Working Papers 114, Indian Council for Research on International Economic Relations, New Delhi, India.
    • Handle: RePEc:ind:icrier:114
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    References listed on IDEAS

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    1. Ila Patnaik, 2003. "India's policy stance on reserves and the currency," Indian Council for Research on International Economic Relations, New Delhi Working Papers 108, Indian Council for Research on International Economic Relations, New Delhi, India.
    2. Guillermo A. Calvo & Carmen M. Reinhart, 2002. "Fear of Floating," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 117(2), pages 379-408.
    3. Carmen M. Reinhart & Kenneth S. Rogoff, 2004. "The Modern History of Exchange Rate Arrangements: A Reinterpretation," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 119(1), pages 1-48.
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    7. Vijay Joshi, 2003. "India and the Impossible Trinity," The World Economy, Wiley Blackwell, vol. 26(4), pages 555-583, April.
    8. Ms. Carmen Reinhart & Mr. Mohsin S. Khan, 1995. "Capital Flows in the APEC Region," IMF Occasional Papers 1995/015, International Monetary Fund.
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    Cited by:

    1. Kenneth M. Kletzer, 2004. "Liberalizing Capital Flows in India: Financial Repression, Macroeconomic Policy, and Gradual Reforms," India Policy Forum, Global Economy and Development Program, The Brookings Institution, vol. 1(1), pages 227-275.
    2. Shah, Ajay, 2008. "New issues in Indian macro policy," Working Papers 08/51, National Institute of Public Finance and Policy.
    3. Smita Roy Trivedi & Bobby Srinivasan, 2016. "Impact of Central Bank Intervention in the Foreign Exchange Market: Evidence from India Using an Event Study Approach," Economic Papers, The Economic Society of Australia, vol. 35(4), pages 389-402, December.
    4. Marcelo Sanchez, 2008. "The link between interest rates and exchange rates: do contractionary depreciations make a difference?," International Economic Journal, Taylor & Francis Journals, vol. 22(1), pages 43-61.

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