While the policy response to structural as well as exogenous factors that lead to mismatch between inflows and outflows and consequent depreciation (or appreciation) of the currency take time to yield results, Reserve Bank has a mandate to maintain orderliness in the foreign exchange market. 7. Now let us turn to volatility. Volatility essentially means unpredictability.
Unpredictability not only of the extent of change over any given time period but also the direction of change. It affects all of us because we are required to take decisions today that will fructify at a future point in time.