Former Reserve Bank of India (RBI) Governor Raghuram Rajan urged Indian policymakers Tuesday to allow some rupee depreciation, arguing it could support exports as high oil prices threaten the country's external balance.
“Some currency depreciation is not necessarily a bad thing in this kind of environment,” Rajan told Reuters. He said an adjustment in the exchange rate can help exporters, while persistently high oil prices could widen India's current-account deficit.
Reuters put the rupee's 2026 decline at about 6% on Oct. 27, the second-worst showing in Asia. The currency's record low was ₹96.96 per U.S. dollar in May.
The RBI reported foreign-exchange reserves of $721.016 billion for the week ended Oct. 16, down $5.011 billion from the previous week. Reserves were $785.706 billion for the week ended Sept. 4, a difference of $64.690 billion between the two reports. That comparison alone does not show how much the central bank spent supporting the rupee.
The central bank recorded $143.596 billion in inflows under its special foreign-exchange swap facility through Sept. 18. Foreign Currency Non-Resident (Bank) deposits, or FCNR(B) deposits, accounted for $132.980 billion. Overseas foreign-currency borrowings and external commercial borrowings added $5.320 billion and $5.296 billion, respectively.
Reuters reported Oct. 15 that three economists estimated the RBI had deployed $75 billion to $80 billion through spot dollar sales and dollar-rupee swaps since the measures began June 8. Their estimate adjusted weekly reserve changes for revaluation effects. The RBI's Sept. 21 release lists facility inflows but gives no utilization total.
Rajan also warned that oil-consuming emerging economies could face greater strain if fighting resumed in the Middle East and Gulf energy infrastructure was hit. Reuters noted that India was counted among the “fragile five” around the time Rajan became RBI governor in 2013.
The RBI said its overseas borrowing channels under the special facility are available through Dec. 31, 2026.
