RBI may not join hands with central banks from other emerging economies to weaken their respective currencies at the IMF meeting this week. RBI’s stance to refrain from intervening in the foreign exchange market stems from the fact that a strong rupee will help rein in inflation and a widening current account deficit will absorb inflows, economists said.
IMF officials and ministers of G-20 nations are likely to raise the issue of global flows and impact on currencies at the plenary session of the IMF and the World Bank meeting to be held in Washington on Friday. An appreciating local currency makes imports cheaper, pulling down input costs and helping in reduction of general price level in the economy.
