IMF to reclassify India’s Fx regime as Re turns volatile

THE INTERNATIONAL MONETARY Fund will soon reclassify India's exchange rate regime to include references to a crawling peg, according to sources, a move that would reflect increased rupee volatility.

- BHASKAR DUTTA & ANUP ROY

The new description marks a change from the Washington-based lender's previous "stabilised arrangement" label, they said. It also comes two years after the IMF upset the Reserve Bank of India by suggesting it was intervening too heavily in the currency market.

A crawling peg involves small, gradual adjustments to a currency to reflect inflation gaps between a country and its trading partners, according to an IMF publication.