The depreciating rupee may have investors and the common man worried, but Reserve Bank of India (RBI) Governor, Sanjay Malhotra, insists the markets will safely determine the domestic unit’s own “correct level”.
Speaking on the declining value of the rupee against the US dollar on Friday after the RBI’s bi-monthly meeting in Mumbai, Malhotra said the central bank does not target any band for the rupee in the forex market since fluctuations in the market are commonplace, and the RBI intervenes only in cases of abnormal or excessive volatility.
“We don’t target any price levels or any bands. We allow the markets to determine the prices. We believe that markets, especially in the long run, are very efficient. It’s a very deep market,” he said while replying to a question on rupee depreciation after the currency had breached the 90-mark against the US dollar.
“The central bank allows the rupee find its correct position, correct level,” he added.
In its bi-monthly monetary policy, the RBI reduced the policy rate (repo) by 25 basis points to boost liquidity to support a “goldilocks” economy amid high US tariffs, and also announced three-year USD/INR Buy Sell swaps of USD 5 billion this month.
Also Read: Rupee falls 5 paise to close at 89.94 against USD
When asked if the USD-INR swap is aimed at checking rupee depreciation, Malhotra said, “It is a liquidity measure. It is not to support the rupee”.
After the RBI’s monetary policy announcement, the rupee lost ground and fell to 90.05 against the American currency, a 16-paise decline from its previous close of 89.89.
The currency is down almost 5 per cent against the dollar this year, the worst performer in Asia.
Forex traders said the apex bank’s rate cut will push the rupee even lower until foreign portfolio investors return in a big way.
Foreign portfolio investment (FPI) to India recorded a net outflow of USD 0.7 billion in 2025-26 (April-December 03 period).
As of November 28, 2025, India’s foreign exchange reserves stood at USD 686.2 billion, providing an import cover of more than 11 months.
Malhotra said the country has sufficient foreign exchange reserves and the current account is manageable. “Given the strong fundamentals of the economy, the country should witness good capital flows going forward,” he added.
Meanwhile, brent crude, the global oil benchmark, fell 0.17 per cent to USD 63.15 per barrel in futures trade.
Foreign institutional investors sold equities worth ₹1,944.19 crore on a net basis on Thursday, according to exchange data.
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