The Reserve Bank of India (RBI) does not consider a weak exchange rate as a policy tool to gain competitive advantages in a world facing high tariffs, Deputy Governor Poonam Gupta stated. Speaking at a Business Standard event in Mumbai, Gupta remarked, “Can exchange rate give us a competitive edge in the world of tariffs? My view is that it’s not even a policy tool,” emphasizing that market forces primarily determine exchange rates. She pointed out that no country can afford to use its currency as a means to gain an edge in trade.
Gupta’s comments, her first public statements since taking office in April, appear to dispel rumors that Indian authorities support a weaker rupee to mitigate the effects of the 50% tariffs imposed by U.S. President Donald Trump. This stance also diminishes expectations among exporters hoping for a preferential exchange rate for shipments to the U.S. to counter the steep duties.
Typically, currency depreciation is perceived as a method to stimulate exports, a tactic employed by China during tariff pressures in Trump’s first presidency. The Indian rupee has been among the poorest-performing currencies in Asia this year, facing downward pressure from equity outflows and tariff uncertainties. However, it regained strength in October, likely due to central bank interventions aimed at curbing speculation.
In her remarks, Gupta also criticized the International Monetary Fund’s (IMF) framework for exchange-rate management. “I would like to remind the likes of the IMF that excessive volatility of the exchange rate is not necessarily a good thing,” she asserted. Research indicates that a lack of reserves and a free float do not consistently yield better outcomes than those practiced in emerging markets, Gupta noted.
India adopts a managed float regime and possesses one of the world’s largest foreign exchange reserves to buffer against external shocks, she added. This position highlights the RBI’s response to the IMF’s recent reclassification of India’s regime to a “stabilized arrangement” from a floating system in its 2023 Article IV report, which cited extensive interventions.
This classification might be reviewed as RBI Governor Sanjay Malhotra has begun to adopt a more hands-off approach to currency management, according to Thomas Helbling, deputy director of the IMF’s Asia Pacific department, during a press conference in Hong Kong last week.
In her address, Gupta projected a promising near-term growth outlook for India, noting several high-frequency indicators that suggest robust expansion in the second half of the fiscal year ending in April. The central bank anticipates a growth rate of 6.8% for the year, still below the nation’s aspirations and potential.
At the same event, India’s Chief Economic Advisor V Anantha Nageswaran indicated that the country’s growth forecasts for the financial year would exceed the previous range of 6.3% to 6.8%. Gupta reiterated Governor Malhotra’s earlier comment that there is scope for further monetary policy easing, stating, “when and by how much is to be seen.” Since February, the RBI has reduced its benchmark repurchase rate by 100 basis points but paused any further cuts in October.
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Published on October 30, 2025.
