Finally, a strong liberalization of FDI regulations, coupled with the government’s active efforts to attract foreign investors, have resulted in record FDI inflows last financial year. We also are careful in moderating periods of extreme volatility in the currency through exchange intervention. This is more of an art than a science, and we are extremely careful not to try and target any particular rate.
Although direct impacts of these developments on the entire economy may not be substantial, we should take account of the possibility that such developments can affect people’s confidence by causing concerns over the sustainability of the financial function in a broad sense, thereby negatively affecting economic activity.