Another development which has received significant public attention in past few months is the depreciation of the exchange rate, and its inflationary impact working against what the tight monetary policy actions intend to achieve.
It is important to recognise that in a largely market determined exchange rate regime, exchange rate could move in any direction; it is an exogenous factor as far as inflation management is concerned, akin to other exogenous determinants of inflation, such as, commodity prices or a non-normal monsoon.