There has been a perceptible pivot in the management of liquidity conditions by the Reserve Bank of India since December 2024. Before we describe the pivot, first, a brief backdrop.India experienced an FX squeeze between October 2024 and February 2025, primarily due to adverse global factors. During this period, the rupee weakened from ₹83.79 to ₹87.40 against the dollar. It would be fair to say that the rupee's depreciation would have been greater had the RBI not stepped in with heavy foreign exchange intervention.
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