New Delhi: Reserve Bank of India (RBI) Governor Sanjay Malhotra on Thursday said the central bank does not aim for any specific exchange rate level for the rupee, and attributed the recent weakness of the domestic currency to strong demand for the US dollar.
“We do not target any level,” Malhotra said, speaking at the VKRV Rao Memorial Lecture at the Delhi School of Economics. “Why is the rupee depreciating? (It) is because of the demand… It’s a financial instrument, and there is a demand for dollars, and if the demand for dollars goes up, the rupee depreciates; if the demand for rupee goes up, dollar comes down, then it appreciates.”
He said the latest depreciation is “trade-related and due to US tariff issues”, adding that he is confident India will have a “good trade deal” with the United States, which could ease pressure on the current account balance.
Malhotra emphasised that India’s external position remains strong, noting the central bank has “very good” foreign exchange reserves and there is “no need for concern on the external sector”.The governor also stressed that the RBI’s foremost priority is maintaining financial stability, and said the central bank is working to simplify regulations “where possible” while keeping “necessary safeguards and guardrails”.
On the banking sector, Malhotra said that given current performance trends, “very soon a few of them will be among the top 100 global lenders”.
The rupee closed at 88.71 against the US dollar on Thursday, down 23 paise, as the greenback strengthened globally following US Federal Reserve minutes that showed most officials opposed a December rate cut. Forex traders said the dollar has surged past the 100 mark as investors reassessed Fed policy expectations.
