Exchange rate management, Macroeconomics

Exchange Rate Management:

Following two  stage devaluation of the Indian rupee  in quick succession in July 1991, the  government introduced Liberalized  Exchange Rate System (LERMS) with  a view to  allow  the exchange rate  to  reflect the scarcity of foreign exchange. However in 1993, this system was replaced by a policy of unified exchange rate mechanism. Under this, exporters and other foreign exchange earners could convert their 100 percent foreign earnings at market rate. Thus presently, the exchange rate of the Indian rupee is determined by the supply and demand conditions in the foreign exchange market. RBI stands ready to intervene to maintain orderly market conditions and to curb excessive speculation.


Posted Date: 11/9/2012 4:38:49 AM | Location : United States

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