The Economic Times issue of August 20, 1997 in a front page article attributes to the Prime Minister the view that the Government would shortly fix a band to signal the exchange rate of the rupee in relation to the US dollar. This report is misleading. It is clarified that while the Committee on Capital Account Convertibility had recommended a band in relation to a neutral real effective exchange rate, no decision in this regard has been taken by the Government and the RBI. While the exchange rate will continue to be determined by market forces, it is recognised that the exchange rate management will have to balance the needs of the exporters to have a favourable exchange rate and the need to prevent monetary expansion from going beyond what is considered appropriate for maintaining price stability.

Alpana Killawala
General Manager

Press Release : 1997-98/149