The Reserve Bank of India's (RBI) forex intervention through forward dollar sales instead of an on-spot basis may undermine its effort to boost the rupee, analysts said.
Why does RBI intervene in the foreign exchange market?
- In favourable times, RBI intervenes in the foreign exchange market to purchase dollars. This, we assume, is done osten- sibly to minimise the deviations of the nominal exchange rate from a targeted ex-
What is the Tobit model of RBI intervention in forex market?
- taking up the patterns and efficacy of the RBI intervention in the forex market by using daily data collated from the press. A Tobit model is appropriate given that the apex bank carries out foreign exchange market operations intended to alter the development of the exchange rate only after the apparent necessity to enter the
How can the RBI sterilise the impact of forex intervention?
- Sterilisation strategy In order to sterilise the impact of forex intervention, the Reserve Bank has a variety of tools available at its disposal, such as open market operations, changes in the cash reserve ratio for banks, and the Market Stabilisation Scheme (MSS).
Can RBI target exchange rate based on Reer-Neu-Tral?
- relating to its intervention in the forex market". RBI has since deemed it unfeasible to target exchange rate based on REER-neu- tral. The RBI still does not make available the neutral REER value, nor does it make it available on a weekly basis. The REER statistics is made available only with a clear lag of two months. In a similar vein,
Therefore, no single company or person can run it. Instead, four different institutions act as pillars and control the Forex market. These are central banks and the government, hedge funds and investment managers, multinational corporations, and individual investors, also known as operators.