No Red Line For The Rupee At 90 Or 91, Says RBI Governor | Profit Exclusive

The central bank does not target any specific rupee level, including 90 to the dollar, and intervenes in the currency market only to curb excessive volatility, RBI Governor Sanjay Malhotra said in an exclusive conversation with NDTV Profit.

Responding to concerns about the rupee amid geopolitical turbulence, Malhotra said India’s exchange rate policy has remained consistent for years, with markets determining prices while the RBI focuses on financial stability and orderly movement in the currency. “We do not pursue or target any price level, any band,” he said, adding that the RBI steps in only to curb undue or excessive volatility, whether due to sharp depreciation or appreciation.

Malhotra said India’s macroeconomic fundamentals remain strong, citing high growth, low inflation, foreign exchange reserves of about $690 billion, and a manageable current account deficit. “On the whole, on the external front, we are very comfortable,” he said, while noting that currency movements are never linear and involve ups and downs.

Over the long term, Malhotra said the rupee has depreciated by about 3% on average, which he described as natural, given that inflation in India is typically higher than in advanced economies. In the current calendar year, the rupee has depreciated about 5%, compared with 2.5% in the previous year, keeping the average at around 3.5%.

The RBI governor reiterated that the RBI does not intervene to defend any specific level such as 90 or 91 to the dollar, and that its actions are only aimed at preventing abnormal or excessive moves in either direction. He described the current phase of the Indian economy as a “Goldilocks” phase, reflecting a balance between growth and stability.