The RBI’s stated policy has always been that it allows the market to determine the Rupee’s value and it does not target any price level or band, according to Governor Sanjay Malhotra.
The aforementioned observation comes in the backdrop of the Rupee breaching the 90 to the Dollar mark a couple of days back.
“We believe that the markets in the long run are very efficient. It is a very deep market. We saw this earlier in February — the rupee to dollar had climbed up to almost 88 and within a period of three months, it came back to below 84,” the governor said at a post monetary policy press meet.
The governor emphasised that fluctuations in USD/INR, volatility does happen and can happen.
“Our effort has been always to reduce any abnormal or excessive volatility and that is what we will continue to endeavour. Our external sector, as I also mentioned in my statement, is very strong…,” Malhotra said.
India’s current account deficit moderated from 2.2 per cent of GDP in Q2:2024- 25 to 1.3 per cent in Q2:2025-26 on account of robust services exports and strong remittances.
Malhotra noted that healthy services exports coupled with strong remittance receipts are expected to keep CAD modest during 2025-26. As on November 28, 2025, India’s foreign exchange reserves stood at US$ 686.2 billion, providing a robust import cover of more than 11 months.
“Overall, India’s external sector remains resilient. We are confident of meeting our external financing requirements comfortably,” he said.
The governor underscored that India has sufficient reserves; the current account is very manageable at about 1 per cent or so.
“And given the strong fundamentals of our country, we should get good capital flows…So, I think, we are in a very comfortable situation in so far as the external sector position is concerned,” he said.
Published on December 5, 2025
