India's Exchange Rate Regime
Managed Float
India moved from a fixed exchange rate system to a market-determined exchange rate in March 1993, following the Liberalised Exchange Rate Management System (LERMS) introduced in 1992. Today India operates a managed floating exchange rate system.
- Under a managed float, the rupee's value is primarily determined by market forces (demand and supply of foreign exchange), with the RBI intervening to curb excessive volatility — not to target a specific exchange rate level.
- This "leaning against the wind" approach allows the rupee to find a market equilibrium over time while preventing destabilising swings.
- RBI uses multiple instruments for forex intervention: spot market transactions (buying/selling dollars), forward contracts, currency swaps, and non-deliverable forwards (NDFs).
- As of March 2026, India's forex reserves stood at approximately USD 709.8 billion — providing import cover of over 11 months, a significant buffer.
- The RBI net sold USD 50.8 billion during April 2025–January 2026 to defend the rupee during earlier volatility episodes.
● Tracked since March 09, 2026 · last seen April 20, 2026 · updates as the daily brief publishes
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