India to continue flexible forex policy

The government would maintain a flexible forex policy even if dollar weakens further.

"On our part, we feel that our approach aimed at exchange rate flexibility within the ambit of market determined exchange rate arrangement along with market interventions essentially to manage volatility and ebb in capital flows seems to have served us well," finance minister, P Chidambaram,
said at the ADB annual meeting here today.

To a question from the floor, Chidambaram said the government would maintain this policy even if the greenback further depreciates and that
India encourages two-way movement of the rupee.

The exchange rate has been quite flexible in the recent years and this has been useful for us as it gives good market signal, the finance minister said.

Recent international research on viable exchange rate strategies in emerging markets has lent considerable support to the exchange rate policy followed by India, Chidambaram added.