• Recently, the RBI has increasingly used its regulatory powers to gain more control over the rupee.
• However, using regulations for currency management can introduce uncertainty in policy and increase business costs in RBI-regulated sectors.
• The Indian rupee operates under a managed floating exchange rate regime, where the Reserve Bank of India (RBI) intervenes in the foreign exchange market to stabilise the rupee by buying or selling dollars.
• Instead of expanding regulatory powers, the RBI should facilitate easier rupee trading within India.
Dig Deeper: Read about the convertibility of the Rupee in the Current Account and Capital Account.
