Way forward Greater internationalization of the rupee India has been pursuing calibrated approach towards capital account liberalization and a more liberalized capital account would require a deep and liquid forex market with wide variety of instruments, especially hedging instruments, to reduce volatility resulting from large capital flows.
Further development of forex market assumes greater significance against the backdrop of greater internationalization of the rupee in future as India’s economic strength increases. Governor Rajan in his statement on taking office on September 4, 2013 stated the following in regard to internationalization of the rupee: “As our trade expands, we will push for more settlement in rupees.