Reserve Bank of India (RBI) Governor Sanjay Malhotra stated that the Indian Rupee (INR) may now be undervalued following its recent depreciation, according to a Reuters report cited on Monday [1]. Malhotra emphasized that the RBI does not target any specific level for the currency but stands ready to intervene in the foreign exchange market if speculative pressures arise [1].
Governor Malhotra highlighted that the central bank possesses nearly $700 billion in reserves, which can be utilized to counteract any undue speculative movements in the currency market [1]. He reiterated that the RBI's primary mandate is to target inflation, stating, "If the evolving inflation trajectory provides policy space, we support growth” [1].
In terms of market reaction, the US Dollar Index (DXY) was trading 0.21% lower on the day at 95.45 at the time of reporting [1]. The article also notes that the RBI actively intervenes in FX markets to maintain exchange rate stability, especially given India's reliance on foreign trade, and uses its reserves and derivatives to manage volatility [1].
No forward-looking statements or analyst opinions beyond Malhotra's comments were provided in the article [1].
CONCLUSION
RBI Governor Malhotra’s remarks suggest the central bank is vigilant about the Rupee’s valuation and prepared to act against speculative pressures, leveraging its substantial reserves. The RBI remains focused on its inflation mandate while supporting growth if conditions allow. Market reaction was modest, with the US Dollar Index slightly lower at the time of reporting.