Overview
- The IMF’s Article IV report shifts India’s de facto regime from “stabilized” to a “crawl-like arrangement,” meaning small, gradual currency adjustments rather than a full free float.
- The rupee has fallen about 4% year to date and touched a record low near 89.49 per dollar last week, after which the RBI stepped in to steady trading.
- IMF staff say the RBI intervenes frequently to limit “excessive volatility” and argue that greater exchange-rate flexibility would better absorb external shocks.
- RBI leaders, including Governor Sanjay Malhotra and Deputy Governor Poonam Gupta, reject parts of the IMF framework and emphasize the need to smooth disruptive moves.
- The IMF maintains its FY26 real GDP growth forecast at 6.6% despite steep US tariffs, noting India’s near-$700 billion in reserves as a policy buffer.