Rupee's Journey: Letting the Market Decide

RBI Governor Sanjay Malhotra emphasized that the central bank does not target specific exchange rate levels for the rupee. Despite the rupee's decline against the US dollar, the RBI remains confident in its approach of letting markets determine currency value amid strong economic fundamentals and adequate foreign reserves.

Reserve Bank Governor Sanjay Malhotra reaffirmed the central bank's stance on allowing the rupee to find its own level against the US dollar, without targeting specific exchange rate bands. His remarks come as the rupee nears the 90-mark to the dollar, prompting widespread market speculation.

Despite the recent depreciation, Malhotra noted that the RBI's primary goal is to manage excessive volatility rather than control the rupee's valuation. He highlighted ongoing efforts like USD/INR swaps to maintain market liquidity, emphasizing that these are not directly aimed at supporting the rupee's current level.

Bolstered by strong economic fundamentals and substantial foreign reserves, India's monetary policy remains focused on stabilizing the economy. The central bank has introduced measures to enhance the rupee's role in global trade, while ensuring that the currency's depreciation aligns with global trends among emerging markets.

(With inputs from agencies.)