The International Monetary Fund (IMF) has reclassified India’s de facto exchange rate regime from a “stabilised” system to a crawl-like arrangement

The International Monetary Fund (IMF) has reclassified India’s de facto exchange rate regime from a “stabilised” system to a crawl-like arrangement:

The International Monetary Fund (IMF) has reclassified India’s de facto exchange rate regime from a “stabilised” system to a crawl-like arrangement.A crawl-like arrangement implies the exchange rate stays within a 2% band around a trend for at least six months, meaning it is not fully floating.A floating exchange rate is determined by market forces and fluctuates freely, while a fixed exchange rate is set and maintained by a government or central bankIndia currently uses a managed float system, where the RBI intervenes in the market to manage extreme fluctuations while allowing the market to determine the general trend.The classification is based on the IMF’s Articles of Agreement and its Article IV surveillance of exchange arrangements, which assesses the currency’s actual movement and the policy commitment to a specific exchange rate path.A crawl-like arrangement differs slightly from the IMF’s “crawling peg.” While a crawling peg involves small, pre-announced adjustments based on defined indicators (such as inflation differentials), a crawl-like arrangement is classified by the IMF based on how the exchange rate actually behaves, even when no formal crawling policy has been declared.