Moreover, measures of underlying inflation that we monitor closely to see through temporary shocks have been increasing further, and currently stand at or near their historical maximum (see Figures 2 and 3). Most notably, core inflation is on the rise and reached 4% in July.
Today, fortunately the rupee has stabilized. We cannot, however, pretend that we are protected from all external instability, as the value of our currency in the domestic foreign exchange market is largely driven by the interplay of domestic and international factors. After almost 84 weeks of non-intervention in the foreign exchange market, the Bank started intervening again to correct emerging distortions in the market.