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IMF pats policy on forex management

Mumbai, May 29: The International Monetary Fund (IMF) has endorsed India’s management of foreign exchange reserves, which it says is in line with global best practices.

The country’s reserve management operations have become more transparent, IMF said in a document published along with the guidelines for foreign exchange management.

The emphasis is on efficient management of reserves and India’s policies like efficient use of technology, sound management of market risks, sophisticated risk management techniques and determination of optimal currency composition are comparable with international best practices, it said.

As on May 17, 2003, India’s foreign exchange reserves reached a record level of $ 79,225 million.

IMF said “maintaining a capacity to intervene in markets to support the exchange rate regime or to contain excessive volatility in foreign exchange market as also to provide confidence to markets and reduce their vulnerability to financial crises” are some of India’s important reserve management objectives.

The document also observes that India intervenes to even out lumpy demand or supply in thin markets and to prevent destabilising speculation.

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