New Delhi: Reserve Bank of India Governor Sanjay Malhotra on Tuesday said the central bank will not intervene to defend any specific level of the rupee, stressing that India’s currency markets are strong enough to determine prices on their own, even as the rupee slipped past the psychologically significant Rs 90-per-dollar mark.
In an interview to NDTV Profit, Malhotra said the RBI’s exchange rate policy has remained consistent over the years, with its role limited to curbing excessive volatility rather than targeting a particular exchange rate.
“The RBI’s policy on the rupee and exchange rates has been consistent. We believe the markets are quite robust, deep and wide, and that markets will ultimately determine prices,” he said, dismissing concerns that the central bank should step in to stabilise the currency.
Malhotra underscored the strength of India’s macroeconomic fundamentals, noting that economic growth remains strong, inflation is under control and foreign exchange reserves are comfortable at around $690 billion. He added that the current account deficit is also at a manageable level, leaving the external sector on a solid footing.
“There will be fluctuations in prices. It will not be a linear movement; there will be ups and downs. Over a longer period, the rupee has depreciated by about 3 per cent,” he said, seeking to put recent currency movements in perspective.
The rupee came under pressure in November due to a combination of factors, including higher US tariffs imposed in August that weighed on export revenues. A sharp rise in imports—particularly gold and silver—and a decline in foreign investment flows also contributed to the currency’s weakness, according to
analysts.