..........Clearly, whatever channel of influence we look at, the overriding cause of rupee depreciation is sheer economic mismanagement. Unfortunately, the RBI is fighting a lone battle. As a result, it hasmoved away from managing the volatility of the rupee to targeting a specific level. While doing so, it is constrained by the impossible trinity (trilemma or impossible trinity says we cannot meet all the three objectives of free capital flow, fixed exchange rate and independent monetary policy). One is, therefore, not surprised by the zeal with which the RBI is targeting liquidity...................
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