Monetary and Currency Management Measures

Following an expansionary monetary policy is NOT a measure to stop rupee depreciation. In fact, it would likely worsen depreciation. Option (a) is a standard measure—curbing imports reduces demand for foreign currency while promoting exports increases foreign currency inflow. Option (b) is correct—Masala Bonds attract foreign investment in rupee terms, increasing rupee demand. Option (c) is correct—easing external commercial borrowing conditions allows companies to raise foreign funds more easily, improving forex position. However, expansionary monetary policy (increasing money supply, lowering interest rates) typically leads to inflation and capital outflows, weakening the rupee further. The RBI would instead follow contractionary policy to defend the rupee during depreciation episodes.

Answer: (d).