The Reserve bank of India has said that a stronger currency will help contain imported inflation, signaling it may tolerate gains in the rupee as it tries to curb price pressures in the Indian economy; that is heading towards a recession.

Letting the rupee gain and making it stronger will increase the value of money that will help fight the imported inflation; which is responsible for decreasing the purchasing power of the rupee. The reserve bank of India, which didn’t intervene in the currency market amid recent lumpy inflows from abroad, shared its viewpoint stating: the recent appreciation of the rupee is working towards containing imported inflationary pressures.

RBI’s apparent comfort fuelled a 1% rally for the Indian currency, after advancing 2% last week. Analysts say that allowing the rupee to strengthen will give the RBI some leeway to keep monetary policy easier. The RBI’s comment shows that the central bank is comfortable with the current appreciation trend of the rupee and will likely tolerate more appreciation in the upcoming future.