Rupee at Record Low: RBI's Approach to Exchange Rate Policy

RBI Governor Sanjay Malhotra reaffirmed the bank's consistent exchange rate policy amidst the rupee's decline to an all-time low. The RBI prioritizes market stability and orderliness without targeting specific currency levels, while recent forex interventions reflect this strategy. The rupee's depreciation and declining reserves mark a challenging economic environment.

The Reserve Bank Governor, Sanjay Malhotra, reaffirmed the central bank's consistent approach to exchange rate policy, stating there is no targeting of specific levels for the rupee, even as it plummeted to a record low of 87.59 against the US dollar.

He emphasized the Reserve Bank's commitment to market stability and efficiency, particularly in managing unforeseen volatility, rather than focusing on specific exchange rate bands. This policy has persisted for years, reflecting the dynamic nature of currency market forces.

Recent figures indicate a significant depreciation of the rupee by about 2% this year and a 3.2% decline since the announcement of the US presidential election results. Despite interventions leading to a USD 45 billion drop in forex reserves, India’s foreign exchange position offers a comfortable ten-month import cover.