No Specific Target for Rupee: RBI Governor Sanjay Malhotra
RBI Governor Sanjay Malhotra clarifies that the central bank does not target a specific price for the Rupee but will curb excessive volatility.
The Reserve Bank of India (RBI) has clarified that it does not aim for a specific price or level for the Rupee. Speaking at the NDTV World Summit 2026 in New Delhi, RBI Governor Sanjay Malhotra emphasized that while the central bank does not target a particular value, it remains vigilant in maintaining orderly conditions within the foreign exchange market.
Tackling Volatility and Speculation
Governor Malhotra stated that the RBI will continue to implement necessary measures to keep speculative activities and excessive volatility in check. He noted that the apex bank has not hesitated to intervene when required, as the primary objective is to prevent disruptions and ensure that the forex market operates smoothly.
“We do not target any price or level for the Rupee, but at the same time, it has been our endeavor that we ensure orderly market conditions in the forex markets and so we have not hesitated,” the Governor remarked.
Global Headwinds and Central Banking Challenges
The Governor highlighted that the current global landscape has made the task of central banks significantly more complex. He pointed toward several critical factors contributing to this instability:
- Geopolitical Tensions: Ongoing conflicts in West Asia and general geopolitical instability.
- Supply Chain Disruptions: Persistent issues affecting the flow of goods.
- Trade Uncertainties: Fluctuating trade relations and policies.
Malhotra noted that the global economy is facing a difficult combination of elevated inflation—driven not just by crude oil but by higher commodity prices—and slowing growth. He cited IMF projections, which place global growth at 3.1% for the current year.
The Mandate: Price and Financial Stability
According to the Governor, the fundamental responsibility of any central banker worldwide is ensuring price stability. While some institutions have a dual mandate that includes promoting growth and maintaining financial stability, the core priority remains controlling inflation.
He observed that most global economies have responded to rising inflation by increasing policy interest rates, with only a few exceptions like Sweden and Japan, where inflation has remained relatively low.
The Indian Context: Inflation and Interest Rates
Discussing India's economic position, Governor Malhotra mentioned that the country began the period of global challenges in February with relatively favorable conditions. However, supply-side pressures have since pushed inflation up steadily, reaching 5.5 per cent.
In response to these evolving economic conditions, the RBI has raised the policy repo rate by 25 basis points. The Governor reaffirmed that the central bank's primary goal remains a twin objective: reigning in inflation to ensure price stability while simultaneously safeguarding financial stability.