Reserve Bank of India Governor Sanjay Malhotra said the central bank will let markets set the rupee while retaining intervention options, outlining how it plans to manage recent currency swings.
At the NDTV World Summit in New Delhi on Oct. 23, Malhotra said, “We do not target any price or level for the rupee.” He said the bank could respond to what it considered speculative behavior or excessive volatility while seeking orderly foreign-exchange trading.
The RBI’s bulletin traces its flexible exchange-rate framework to March 1993. It says officials may act in either direction to smooth excessive currency moves and keep trading orderly, without defending a chosen rupee value. The central bank has listed abrupt capital flows, demand for oil imports, clustered government payments and geopolitical developments among factors that can create currency-market volatility.
Reuters reported that the rupee closed at 94.8175 per U.S. dollar on Oct. 22, down 0.4% after rising for eight straight sessions. Reuters said the rally had taken it to a more than six-week high.
Malhotra also pointed to recent growth. Data released Aug. 31 by the Ministry of Statistics and Programme Implementation (MoSPI) showed real gross domestic product grew 7.8% year over year in April-June, the first quarter of fiscal 2026-27. MoSPI estimated output at ₹81.36 lakh crore, compared with ₹75.46 lakh crore a year earlier.
Provisional consumer-price inflation rose 5.54% year over year in September, above the government’s 4% target but within its 2%-6% tolerance band. The band applies from April 2026 through March 2031, and the RBI’s Oct. 7 policy resolution projected 5.2% inflation for fiscal 2026-27. At the summit, Malhotra called inflation elevated but said it remained within the government’s tolerance range.
The next consumer-price release is scheduled for Nov. 12, and the RBI’s next policy meeting is set for Dec. 2-4.
