The Reserve Bank of India will continue to use currency intervention to reduce volatility in the country's exchange rates, the bank's governor, Raghuram Rajan, said on Monday.
"There is a school of thought that says: Let the exchange rate move wherever it will," said Rajan, at the Inaugural Kotak Family Distinguished Lecture held at Columbia Law School in New York.
"That's something we could do," Rajan said. "But in emerging markets, with institutions not as strong as industrialized countries, you find there are collateral effects of both the capital moving in and going out."
India will intervene in the currency market when there's a sustainable risk in global markets and the country sees a flood of capital coming in, he said.