The Reserve Bank of India (RBI) will do “whatever is required” to ensure orderly movements in the foreign exchange market and curb undue speculation, Governor Sanjay Malhotra said in an interview with Mint, adding that the rupee may now be undervalued after its recent slide.
Speaking amid concerns over the rupee nearing the psychologically significant 100-per-dollar mark due to the ongoing conflict in West Asia, Malhotra said the central bank had enough tools and reserves to tackle excessive volatility in currency markets.
“Our policy remains the same. We do not target any price or level or band. It is only abnormal and high volatility that we try to curb, so as to have an orderly movement in the forex market,” Malhotra told Mint.
“But, yes, if there is undue speculation getting built, then we are certainly there to bring order… We will do whatever is required to ensure orderly price discovery in the forex market,” he said, adding that India has forex reserves of around $700 billion.
The RBI chief also said the recent depreciation in the rupee does not suggest overvaluation.
“With the recent depreciation, it would be reasonable to think that rupee is not overvalued. If anything, one could argue that rupee has become undervalued, both in nominal as well as in REER terms,” he said.
Malhotra added that the rupee could appreciate once tensions in West Asia ease, as seen during earlier episodes of external-shock-driven volatility.
On monetary policy, the governor reiterated that inflation remains the RBI’s primary focus even as the central bank remains watchful of growth concerns.
“For us, it’s always inflation. Our primary mandate is inflation. It is price stability,” he said, while adding that the RBI retains flexibility under its current neutral policy stance.
Malhotra also said India’s macroeconomic fundamentals remain strong despite external pressures from rising crude oil prices and geopolitical tensions.
He said the current account deficit may come under some pressure due to elevated oil prices, but resilient services exports, moderating gold imports and stable remittance flows could help contain the impact.
The governor pointed to robust foreign direct investment inflows, which touched a record $94.5 billion in 2025-26, while expressing optimism that capital outflows and repatriations would moderate going forward.
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On the balance of payments position, Malhotra said the situation was “not an undue concern yet”, though it required sustained efforts to improve exports, energy security and ease of doing business.
He also defended RBI interventions in the forex market, saying such measures are globally accepted tools to ensure orderly exchange-rate adjustments and financial stability.
Separately, Malhotra said the RBI was continuing to push the internationalisation of the rupee through local currency arrangements with countries including the UAE, Indonesia, Mauritius and the Maldives.
The RBI chief also highlighted the progress of the central bank digital currency (CBDC) pilot, which now has over 1 crore users onboarded across 19 banks and two non-bank entities, according to the interview.
