## Monday, April 14, 2008

### A gentle introduction to exchange rate regimes

Read this article by Mark Stone, Harald Anderson, and Romain Veyrune from the latest Finance & Development. And after that, if you're curious about what is going on in India, see this EPW article by Ila Patnaik.

http://openlib.org/home/ila/PDFDOCS/11182.pdf

2. Thanks! I fixed the broken link. Now the new version works.

3. Ajay, what's your take on why the RBI is not transparent when it changes the volatility of the Rupee to the USD? Is it due to some economic of political reasons or is it the GoI just being herself.

4. RD,

I have tried hard to figure it out and failed.

In the central government, by and large the mood has swung to a point where it is understood that non-transparency is a bad thing. E.g. the RTI pretty much puts an end to efforts at hiding stuff. In contrast, in speeches by RBI staff, one still gets a sense of unreconstructed old-fashioned monetary policy, where there is a mystique of central banking', where there is constructive ambiguity', where discretion and nontransparency are better than rules and transparency, where there are "multiple objectives" so you have to be faithful and accountable to no objective, etc.

In most countries, central banks have been at the forefront of monetary policy reform. So far, that hasn't been the case at RBI. I have seen greater technical strength amongst younger people at RBI.

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