RBI Governor Clarifies Rupee Strategy Amid Forex Fluctuations

RBI Governor Sanjay Malhotra stated that the central bank does not fix a target for the rupee's value. Despite the rupee's recent decline against the US dollar, Malhotra emphasized market-determined rates and announced liquidity measures rather than direct interventions to support the currency.

Reserve Bank of India Governor Sanjay Malhotra clarified on Friday that the central bank does not set exchange rate targets for the rupee. Speaking amidst the rupee's descent past the 90 mark against the US dollar, he stressed that the RBI's approach allows the domestic currency to self-regulate.

During the post-monetary policy briefing, Malhotra highlighted that market fluctuations are a norm and asserted the RBI's responsibility in minimizing undue volatility. He revealed that the USD 5 billion USD/INR Buy Sell swap introduced in the recent policy is a liquidity measure, independent of rupee depreciation support.

With India holding substantial foreign exchange reserves of USD 686.2 billion, Malhotra expressed confidence in capital inflows, citing strong economic fundamentals. He confirmed a repo rate cut by 25 basis points, focusing now on effective transmission to the economy.

(With inputs from agencies.)