The Indian foreign exchange market has operated in a liberlised environment for more than a decade. A cautious and well-caliberated approach was followed while liberlising the foreign exchange market and the focus was on gradually dismantling controls and providing an enabling environment to all entities engaged in external transactions. Hence, in view of the high volumes of Foreign Exchange Reserve (FER) and their currency composition, the need for and the significance of its management has emerged as an extensive issue of debate in India since the aftermath of recent Asian crises. The issues are mainly centered on the desirability, form and content of capital control, risk containment strategies in external debt management and the desirable sequence of capital account liberalization. Though the desire to accumulate FER arises for several reasons, the full and push factors are also equally responsible for the flow of reserves to the emerging economies including India. But the movments in the behaviour of the exchange rate policies seen in most of the emerging economies have influenced to greater dgree the Indian system as well during the postunification period. Further, the volatilities in the exchange rate regimes since 1992, certainly awakend the monetary authories to take up appropriate policy initiaties to ensure stability and confidence among the participants in the exchange market world over. Against these backdrops, this paper focuses on the evolution of the movements of exchange rate regimes undergone since 1992 onwards. Besides, this, the paper also examines the emerging policy concerns in the light of the initiative to fuller capital account convertibility approach recently in India. The paper concludes with needed future agenda in view of impacts of recent global financial imbalances on different economies.
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