Rupee much more flexible now, FX rate should be first line of defence: IMF’s Srinivasan

IMF official Krishna Srinivasan says the Indian rupee now enjoys greater flexibility after last year's reclassification as "crawl-like" from "stabilised". While Srinivasan deferred to the IMF's Article IV consultation team's exchange rate assessments, he stated that allowing the currency to fluctuate is preferable, adding that multi-country interventions have offered little relief.

The IMF's regional economic outlook highlights challenges in creating jobs through the export-led manufacturing model, particularly as youth unemployment remains high in Asia. With relatively limited intra-regional trade (30%) compared to mature economies, Srinivasan emphasized potential benefits from increased integration to support manufacturing-led exports and job creation.

He also discussed the importance of addressing the skills gap, especially in light of AI advancements impacting labor demand.