Rajan will not hesitate to use forex reserves to curb rupee volatility

  1. India has $380 billion in forex reserves to be used as and when the need arises, says RBI Governor Raghuram Rajan.
  2. The RBI, however, is looking to calm investors with Rajan saying that India is in a far better position to weather the volatility given the strength in macroeconomic fundamentals.
  3. Rajan also said that instead of focusing on the rupee’s fall against the dollar, the currency’s real effective exchange rate has to be looked.

What is REER? Elaborate with an example. 

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