IMF Advises India to Let Rupee Absorb External Shocks from US Rate Hikes

The International Monetary Fund (IMF) has suggested that India allow its currency to absorb external shocks as the US Federal Reserve tightens monetary policy. The IMF spokesperson noted that rate hikes by the Fed have historically put pressure on emerging markets through capital flows, financing conditions, and exchange rate movements.

In a statement, the IMF spokesperson said that while the impact of the Fed's actions on India would depend on various factors, the country enters this period with strong growth momentum and healthy external buffers. The spokesperson emphasized that allowing the exchange rate to act as a shock absorber, while keeping monetary policy focused on domestic price stability, remains an effective approach.