Both when inflows and outflows are out of line with our requirement, the Reserve Bank has to make a determination on whether or not to intervene in the foreign exchange market to contain volatility and prevent instability. As I explained above, no option is totally benign; no matter what option we follow, there are costs.
Our effort always is to make an assessment of the forces driving the capital flows and act only to smooth volatility in the exchange rate movement and prevent disruptions to macroeconomic stability. In doing so, we have to be mindful of the inflation situation, the robustness of our foreign exchange reserves, and importantly, the credibility of our actions.