The Reserve Bank of India’s (RBI) official stance emphasizes that it permits the market to dictate the value of the Rupee without targeting specific price levels or ranges, as stated by Governor Sanjay Malhotra. This remark follows the Rupee’s recent decline, crossing the 90-to-1 US Dollar threshold just days ago.
Governor Malhotra noted, “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.” This was mentioned during a press conference after the monetary policy announcement.
He acknowledged that fluctuations in the USD/INR exchange rate do occur, stating, “Volatility does happen and can happen.” However, he reiterated the RBI’s commitment to mitigating any undue or excessive volatility. “Our external sector, as I also mentioned in my statement, is very strong,” he added.
According to recent reports, India’s current account deficit (CAD) decreased from 2.2 percent of GDP in the second quarter of 2024-25 to 1.3 percent in the equivalent period of 2025-26, driven largely by strong services exports and robust remittance flows.
Malhotra expressed optimism, indicating that healthy services exports alongside strong remittances are likely to keep the CAD manageable in 2025-26. As of November 28, 2025, India’s foreign exchange reserves had reached US$ 686.2 billion, which provides a solid import cover for over 11 months.
Malhotra stated, “Overall, India’s external sector remains resilient. We are confident of meeting our external financing requirements comfortably.” He emphasized that India possesses adequate reserves and painted a positive picture of the current account, which stands at a manageable level of about one percent.
“Given the strong fundamentals of our country, we should get good capital flows… So, I think we are in a very comfortable situation in terms of the external sector position,” he concluded.
Published on December 5, 2025.
