Rupee: RBI’s effort has always been to reduce any abnormal or excessive volatility, says Guv Malhotra

The RBI’s official stance maintains that market forces dictate the rupee’s valuation without any predetermined target level, clarified Governor Sanjay Malhotra.

These remarks follow recent developments where the rupee crossed the 90-per-dollar threshold.

“Long-term market efficiency remains evident in our deep currency markets,” the governor noted during a post-policy briefing. “Earlier this February, the rupee-dollar rate approached 88 before correcting to under 84 within three months.”

Malhotra acknowledged that USD/INR fluctuations and volatility are normal occurrences in currency markets.

“Our interventions focus solely on curbing abnormal or excessive swings, consistent with our sustained approach. India’s external sector fundamentals, as reiterated earlier, remain robust,” he affirmed.

Data indicates India’s current account deficit narrowed from 2.2% of GDP in Q2 2024-25 to 1.3% in Q2 2025-26, driven by resilient services exports and steady remittance inflows.

The governor projected that sustained services exports and remittances should maintain a manageable CAD through 2025-26. Foreign exchange reserves stood at $686.2 billion as of November 28, 2025 – offering a solid import cover exceeding 11 months.

“India’s external sector health inspires confidence in smoothly meeting all financing obligations,” he assured.

Malhotra highlighted India’s substantial reserves and sustainable current account position hovering near 1% of GDP.

“With strong macroeconomic fundamentals attracting capital inflows, we’re positioned comfortably regarding external sector stability,” he concluded.

Published on December 5, 2025