RBI’s new playbook: Letting the rupee adjust to support economic growth

The rupee weakened amid tariff concerns but showed asymmetry in recovery, indicating RBI’s intent to correct overvaluation. The central bank has shifted its FX intervention strategy to support growth by easing monetary conditions. A rate cut is likely, and a weaker rupee could aid fiscal consolidation, protect domestic manufacturers, and help RBI transfer surplus to the government.

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