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Monetary policy should not target exchange rate

June 4, 2026
Source: thehindubusinessline.com thehindubusinessline.com
News Snapshot:
The rupee touching 96.96 to the dollar on May 20 was not simply a story of crude oil, dollar strength, or foreign portfolio outflows. Those were the triggers. The deeper issue is that India is operating inside the classic open-economy trilemma: the attempt to preserve currency stability, monetary-policy autonomy, and access to global capital at the same time.India does not sit at any pure corner of this triangle. It has partial capital controls, a managed float, and an inflation-targeting central bank. But partial insulation is not full insulation. The pressure is visible in the data: the current account deficit widened...
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