IMF Classifies India’s Exchange Rate Regime to a Crawl-Like Arrangement

• 28 Nov 2025

Source: FE

The International Monetary Fund (IMF) has reclassified India’s de facto exchange rate regime from a “stabilised” system to a crawl-like arrangement. 

• A crawl-like arrangement implies the exchange rate stays within a 2% band around a trend for at least six months, meaning it is not fully floating. 
  • A floating exchange rate is determined by market forces and fluctuates freely, while a fixed exchange rate is set and maintained by a government or central bank 
    • India currently uses a managed float system, where the RBI intervenes in the market to manage extreme fluctuations while allowing the market to determine the general trend. 
• The classification is based on the IMF’s Articles of Agreement and its Article IV surveillance of exchange arrangements, which assesses the currency’s actual movement and the policy commitment to a specific exchange rate path. 
  • A crawl-like arrangement differs slightly from the IMF’s “crawling peg.” While a crawling peg involves small, pre-announced adjustments based on defined indicators (such as inflation differentials), a crawl-like arrangement is classified by the IMF based on how the exchange rate actually behaves, even when no formal crawling policy has been declared. 
• IMF’s Articles of Agreement: Adopted at United Nations Monetary and Financial Conference in 1944, they serve as the organization’s founding charter and have been ratified by 190 member countries, including India. 
  • They define the IMF’s purpose, governance structure, member obligations, and rules of operation, including those on Special Drawing Rights.  
  • The Articles mandate key IMF functions such as global monetary surveillance, lending to countries in need, and providing technical assistance. 

Read more: IMF Report on India's Financial System