RBI to Do ‘Whatever Is Required’ for Forex Stability: Sanjay Malhotra

Synopsis

RBI Governor Sanjay Malhotra said the central bank is ready to take necessary steps to maintain stability in the foreign exchange market. He also indicated that the rupee may currently be undervalued despite recent weakness.

According to Mint, Malhotra emphasized that the RBI does not target a specific exchange rate or currency band. Instead, the central bank focuses on ensuring stability and smooth market functioning.“Our policy remains the same. We do not target any price or level or band. It is only abnormal and high volatility that we try to curb, so as to have an orderly movement in the forex market”, Malhotra told Mint. He further added: “But, yes, if there is undue speculation getting built, then we are certainly there to bring order… We will do whatever is required to ensure orderly price discovery in the forex market”.

The RBI governor highlighted that India currently has foreign exchange reserves of around $700 billion, giving the central bank enough strength to respond to sudden market disruptions. Malhotra also addressed concerns around the recent weakness in the Indian currency. He said the latest movement does not indicate that the rupee is overvalued. “With the recent depreciation, it would be reasonable to think that rupee is not overvalued. If anything, one could argue that rupee has become undervalued, both in nominal as well as in REER terms”, he said in the interview with Mint.

He suggested that the rupee could strengthen again once geopolitical tensions ease, pointing to previous situations where external shocks caused temporary pressure on currencies. Apart from currency concerns, the RBI chief reiterated that inflation remains the central bank’s top priority in policy decisions. “For us, it’s always inflation. Our primary mandate is inflation. It is price stability”, he said.

He also pointed to strong foreign direct investment trends, saying India recorded around $94.5 billion in inflows during 2025-26. The RBI governor also discussed ongoing efforts to expand the global use of the Indian currency through local currency arrangements with countries such as the UAE, Indonesia, Mauritius, and the Maldives.

Additionally, he highlighted progress in the central bank digital currency pilot program, which has now crossed over one crore users through participating banks and financial institutions.