RBI Governor Sanjay Malhotra to consider further measures to curb speculative trading
GS3Economy · S&T · Environment · Security· Monetary policy, RBI & banking· Prelims·
Why in news
RBI Governor Sanjay Malhotra stated that the central bank is considering further measures to curb speculative trading following a recent interest rate hike.
Background
The RBI recently raised interest rates from 5.25 per cent to 5.5 per cent. Analysts suggested several measures to support the rupee, including raising the Marginal Standing Facility (MSF) rate and increasing exchange rate flexibility.
Facts for Prelims
- FactRBI raised interest rates from 5.25 per cent to 5.5 per cent
- FactProposed measures to support the rupee include raising MSF rates and increasing exchange rate flexibility
For Mains
Q. Discuss the role of the Reserve Bank of India in managing currency volatility and curbing speculative trading in the Indian economy.
Dimensions to cover in your answer
- Monetary policy trade-off: Balancing interest rate hikes to curb speculation against the risk of slowing industrial growth
- Exchange rate management: Evaluating the impact of increased exchange rate flexibility on capital flight and rupee stability
Keywords: Speculative trading · Monetary policy · Liquidity management · Currency volatility · Marginal Standing Facility
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