The IMF ought to revise its opinion on the rupee

RBI should hold its ground against the Fund on exchange rate intervention. This is not a rupee-pegging game, but what works for us at today's comfort level of openness to capital

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India and other developing countries have long argued for reforms of multilateral institutions like the International Monetary Fund (IMF) and World Bank to make them more representative of the emerging world order and less like handmaidens of advanced economies, especially of the US-led West. On Tuesday, the IMF gave us one more reason to press for speedy reform. In a move uncannily reminiscent of a similar observation by the US government in 2018, it claimed the Reserve Bank of India (RBI) had intervened "excessively" in the foreign exchange market to influence the rupee’s value. The Fund argued that from December 2022 to October 2023, our currency’s movement was "too restricted" (it traded between ₹80.88 and ₹83.42 to the US dollar). This narrow trading range, it says, was not a reflection of any improvement in our external position, as the Reserve Bank of India (RBI) reportedly said in its rebuttal, but the result of excessive RBI intervention "beyond what was required to manage market conditions." As a result, pursuant to its Article IV review, the Fund has reclassified In