Speaking about the value of money, the Reserve Bank is concerned not only with the value of money in India, but the related issue of value of our rupee in relation to the currencies of other countries: that is maintaining the faith of people outside our country also, in our currency. This work relates to exchange rate management.
Rupee cannot be directly used in settling transactions with other countries and international currencies like US dollar have to be used. To ensure smooth international transactions, it is necessary to maintain the external stability of the Rupee. Incidentally, confidence in Rupee outside our country also depends very much upon domestic price stability.