.........The quality of central bank communication to the markets has become crucial to the success of monetary and related policies. In India too, there have been occasions when policymakers have successfully ‘talked up' the rupee's external value. During the recent bout of the rupee's weakness, the statements of senior government and RBI officials that there are definite limits to intervention and that ,in any case, the central bank will not ‘sell too many dollars' to defend the rupee, most probably undermined the central bank's belated defence of the rupee...........................
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