RBI Governor Sanjay Malhotra Says Falling Rupee is Normal Market Fluctuation; No Intervention Planned

Reserve Bank of India (RBI) Governor Sanjay Malhotra has reaffirmed the central bank's long-standing hands-off approach to the rupee's exchange rate, stating that market forces will ultimately determine the currency's value. In an exclusive interview with NDTV Profit’s Tamanna Inamdar on January 13, 2026, Malhotra described the recent breach of the Rs 90-per-dollar level as a normal fluctuation rather than a crisis, emphasizing that the rupee's depreciation is part of routine market dynamics.

The Indian rupee has been under sustained pressure, slipping past the psychologically significant Rs 90 mark against the US dollar in recent trading sessions. This milestone has drawn widespread attention from investors, businesses, and the public, as it marks a new low for the currency amid global economic uncertainties, rising US interest rates, and domestic factors such as widening trade deficits. Despite the sharp movement, Governor Malhotra sought to downplay concerns, noting that such shifts are expected in a floating exchange rate regime.

Malhotra, who took over as RBI Governor from Shaktikanta Das in late 2025, stressed the consistency of the central bank's policy over the years. "The RBI's policy on rupee and exchange rates has been consistent," he said. "We believe that the markets are quite robust; they are quite deep, and they are quite wide. And so we believe the markets will ultimately determine the prices." He made it clear that the RBI has no intention of intervening to defend a specific level for the currency, limiting its role to curbing excessive volatility when necessary.

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The governor's comments reflect the RBI's long-term strategy of allowing greater flexibility in the rupee's value while maintaining sufficient foreign exchange reserves to manage disorderly movements. This market-determined approach has been in place since the early 1990s, evolving from a managed float to a more liberalized regime. Malhotra highlighted that India's forex reserves remain strong, providing a buffer against external shocks, and that the central bank continues to monitor developments closely without targeting any particular exchange rate.

The remarks come at a time when the weakening rupee is contributing to higher import costs, particularly for crude oil and key commodities, potentially fueling inflationary pressures in the economy. However, Malhotra's assurance that the RBI will step in only to smooth out undue volatility has been welcomed by market participants who value predictability in policy. As global factors such as US Federal Reserve actions and geopolitical developments continue to influence currency markets, the RBI's stance underscores its commitment to letting market fundamentals guide the rupee's trajectory in the long run.

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