Rupee: depreciated tactics

The rupee’s sharp fall has elicited much discussion in recent times. Stemming from the country’s macro imbalances – an enlarged fiscal deficit and persistent high inflation spilling over into an unsustainable, big current account deficit – the currency’s weakness has been exacerbated by an external financing squeeze. Hence a much sharper fall relative to currencies of other emerging nations. This brings exchange rate management into focus. How do the policy makers perceive this?

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