The governor of the Reserve Bank, Sanjay Malhotra, said on Friday that the central bank lets the rupee find its own proper level in the foreign exchange market rather than aiming for any certain range.
Rupee Nears 90 Level
At the time of the governor’s remarks, the rupee was trading close to the 90-mark vs the US dollar.
“We do not aim for any particular bands or pricing points. We let the marketplace set the pricing. We think markets are very efficient, particularly over the long term. In response to a query on the depreciation of the rupee during a news conference after monetary policy, he said, “It is a very deep market.”
According to Malhotra, market swings continue to occur, and the RBI constantly works to lessen any unusual or excessive volatility. “And that is what we will continue to attempt,” he said. The RBI issued three-year USD/INR buy-sell swaps worth USD 5 billion this month as part of its bimonthly monetary policy.
RBI Clarifies Rupee Strategy
Malhotra said, “It is a liquidity mechanism,” when asked whether the USD-INR exchange is intended to prevent currency devaluation. The purpose is not to bolster the rupee.
He emphasized that the central bank allows “the rupee find its proper position, correct level” and that the RBI does not aim any level of the rupee relative to the US currency.
The governor said that the nation has enough foreign currency reserves and a manageable current account, and that future capital flows should be favorable given the solid economic foundations.
FPI Outflows Pressure India
Due to persistent withdrawals from the equities sector, foreign portfolio investment (FPI) to India has seen a net outflow of USD 0.7 billion so far in 2025–2026 (April–December 03).
In comparison to the previous year, flows under non-resident deposit accounts and foreign commercial borrowings decreased. With USD 686.2 billion in foreign currency reserves as of November 28, 2025, India could fund its imports for more than 11 months.
Malhotra said that after lowering the policy rate (repo) by 25 basis points, the emphasis would now be on transferring the rate reduction to the actual economy.
