This paper is part of a collaborative project on Capital Account Convertibility and Macroeconomic Management initiated at ICRIER in April 1999 and supported by a grant from the Ford Foundation. Professor Kenneth Kletzer of University of California at Santa Cruz and Renu Kohli, Senior Fellow at ICRIER on deputation from the Reserve Bank of India, examine the relevance of the monetary approach to exchange rate behaviour for India under the managed float regime in this study. A conventional monetary model is fitted on Indian data, using quarterly observations from 1993 to 1998.
