RBI does not target any band for rupee, allows it to find its own level, says Governor Sanjay Malhotra

Reserve Bank Governor Sanjay Malhotra on Friday (December 5, 2025) said the central bank does not target any band for the rupee in the forex market, and allows the domestic currency to find its own correct level.

The Governor’s statement came at a time when the rupee breached the 90-mark against the U.S. dollar, and is hovering near that level.

“We don’t target any price levels or any bands. We allow the markets to determine the prices. We believe that markets, especially in the long run, are very efficient. It’s a very deep market,” he said while replying to a question on rupee depreciation at a post-monetary policy press meet.

Mr. Malhotra said fluctuations in the market keep taking place, and the effort of the RBI is always to reduce any abnormal or excessive volatility.

“And that is what we will continue to endeavour,” he added.

In its bi-monthly monetary policy, the RBI announced three-year USD/INR Buy Sell swaps of $5 billion this month.

When asked if the USD-INR is aimed at checking rupee depreciation, Mr. Malhotra said, “It is a liquidity measure. It is not to support the rupee”.

Stressing that RBI does not target any level of rupee against the U.S. dollar, he said the central bank allows “the rupee find its correct position, correct level”.

The Governor further said the country has sufficient foreign exchange reserves and the current account is manageable, and given the strong fundamentals of the economy, the country should witness good capital flows going forward.

Foreign portfolio investment (FPI) to India recorded a net outflow of $0.7 billion in 2025-26, so far (April-December 03), due to unabated withdrawal from the equity segment.

Flows under external commercial borrowings and non-resident deposit accounts moderated compared to the last year.

As of November 28, 2025, India’s foreign exchange reserves stood at $686.2 billion, providing a robust import cover of more than 11 months.

Mr. Malhotra further said that having reduced the policy rate (repo) by 25 basis points, the focus will now be on transmission of the rate cut to the real economy.