RBI Governor Says Regulator Tends To Not Intervene In Managing Rupee

Reserve Bank of India (RBI) Governor Sanjay Malhotra emphasised on Wednesday that the central bank does not pursue a specific value or range for the rupee-dollar exchange rate. Rather, its role in the foreign exchange market is limited to managing sharp, disruptive volatility when necessary.

Speaking to the media following the central bank’s April Monetary Policy Committee (MPC) review, Malhotra reaffirmed the RBI’s long-standing stance of non-intervention unless market movements turn erratic.

“So far as the currency management is concerned we do not actually intervene in the currency management. It's only...for excessive or disruptive volatility that we do. So we do not try to manage or target any reach or band or level of the Indian rupee,” he stated.

He further noted, “I think the markets in India are quite deep, quite wide, and the market forces know the best, know what the levels should be.”

However, the Governor clarified that if need be, the RBI will intervene in currency management, but only in the condition of excessive volatility.

Also Read : RBI MPC April 2025: Repo Rate Cut To 6 Per Cent, Will This Make Your Home Loan Cheaper?

Minimal Impact from US Tariffs Compared to Other Nations

The Governor also weighed in on the global trade environment, particularly in light of newly imposed US tariffs. He remarked that India appears to be relatively better positioned compared to other affected nations, including China and smaller economies. “...we are better placed than some of the other countries...we have a comparative advantage,” Malhotra said. However, he acknowledged that such tariffs are ultimately a drag on growth, adding that they present fresh challenges to the global economy.

During the policy announcement earlier in the day, Malhotra observed that these trade-related developments have intensified the unpredictability surrounding global growth prospects. “The recent trade tariff related measures have exacerbated uncertainties clouding the economic outlook across regions, posing new headwinds for global growth and inflation,” he said.

Notably, the MPC decided to unanimously slash benchmark interest rates by 25 basis points to 6 per cent and change the fiscal policy stance from 'neutral' to 'accommodative'.

Rupee Continues Losing Streak as FIIs Exit

The Indian currency continued its downward trend on Wednesday, slipping for the fourth consecutive session. It dropped by 30 paise to hit 86.56 against the US dollar in early trading hours. Market sentiment remained weak, further weighed down by foreign institutional investors (FIIs) offloading equities worth Rs 4,994.24 crore on a net basis the previous day, as per data from stock exchanges.

On the broader macroeconomic front, the RBI Governor noted that the evolving trade dynamics have triggered notable shifts across financial markets. “Amid this turbulence, the US dollar has weakened appreciably; bond yields have softened significantly; equity markets are correcting; and crude oil prices have fallen to their lowest in over three years,” he pointed out.

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