You have presented the strangest Economics Theories I have ever seen.
The build up of forex reserves creates inflationary pressure. India wants to reduce her massive forex reserves by appreciating the Rupee. When the Rupee appreciates it lowers the price of imports like oil and food. It also reduces exports and therefore reduces Aggregate Demand. Together this lowers inflationary pressures.
More importantly when interest rates appreciate people do not borrow as much to invest or to buy a car/house. This lowers aggregate demand which lowers prices.
Tis called Intro to Macroeconomics.
PLEASE read an Economics textbook and educate yourself. Most of my first yr college students can handle Samuelson and Nordhaus.
