Professional Documents
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Monetary policy - Management of money supply and interest rates by central banks to influence prices and employment Expansion or contraction of investment and consumption expenditure.
TYPES OF INTERVENTION
DIRECT INTERVENTION INDIRECT INTERVENTION STERILISED INTERVENTION UNSTERILISED INTERVENTION
Sale of dollars in the foreign exchange market is generally guided by excess demand conditions that may arise due to several factors.
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Similarly, the Reserve Bank purchases dollars from the market when there is an excess supply pressure. There is some evidence of co-movement in demand-supply mismatch proxied by the difference between the purchase and sale transactions in the merchant segment of the spot market and intervention by the Reserve Bank.
Thus, the Reserve, Bank has been prepared to make sales and purchases of foreign currency in order to curb volatility, even out lumpy demand and supply in the foreign exchange market and to smoothen jerky movements, while allowing the rupee to move in both directions.
However, such intervention is generally not governed by any pre-determined target or band around the exchange rate.
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CURRENCY DEPRECIATION
It means that Indian currency is worth lesser now in comparison with some other currency.
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Exporters
Foreign investors
Importers
OIL PRICES
With the increasing price of Oil in international markets, India has to pay an increased amount of dollars to import the same quantity of oil. Further more, with an increase in the quantity of oil imported into India, a further pressure is imposed on the demand of dollars to pay to our suppliers from whom we import Oil.
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Foreign Holidays
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