GOVERNMENT OF INDIA
Ministry of Finance
DEPARTMENT OF ECONOMIC AFFAIRS
UNSTARRED QUESTION NO 226
TO BE ANSWERED ON 20.11.2007
Exchange Rate Mechanism.
SHRI RAJEEV CHANDRASEKHAR
Will the Minister of FINANCE be pleased to state:-
(a) whether Government propose to adopt more managed and pegged exchange rate mechanism in the interest of development of manufacturing and exporting industries; and
(b) if so, by when it is likely to be done?
MINISTER OF STATE IN THE MINISTRY OF FINANCE
(SHRI PAWAN KUMAR BANSAL)
(a) and (b) No Sir. Since 1993, exchange rates are market determined. The exchange rate policy of the Reserve Bank of India is guided by the broad principles of careful monitoring and management of exchange rates with flexibility, without a fixed or a pre-announced target or a band, coupled with the ability to intervene as and when necessary. The overall approach to the management of India`s foreign exchange reserves takes into account the changing composition of the balance of payments and `liquidity risks` associated with different types of flows and other requirements. Excess volatility in foreign exchange markets is contained through intervention as and when necessary and followed up by sterilization of liquidity through issuance of treasury bills/dated securities under the Market Stabilization Scheme.