RBI targets no rupee level but will curb speculation, says Governor Malhotra

Reserve Bank of India Governor Sanjay Malhotra has said the central bank does not aim for any particular price or level of the rupee against the US dollar, but will keep stepping in to stop speculation and sharp swings in the currency market. Speaking at the NDTV World Summit 2026 in New Delhi, in remarks reported on Sunday, 25 October 2026, he said: "We do not target any price or level for the rupee, but, at the same time, it has been our endeavour that we ensure orderly market conditions in the forex markets." His comments came after a period in which the rupee had come close to its weakest level ever, near Rs 97 per dollar, before recovering.

The rupee's exchange rate affects almost every household and business in India. A weaker rupee makes imports such as crude oil, electronics, gold and fertiliser more expensive, which feeds into fuel prices and inflation. It also raises the cost of foreign education and travel and of repaying loans taken in dollars. On the other hand, exporters and families receiving money from abroad get more rupees for every dollar.

The RBI's position is a balance. It does not fix the exchange rate, because defending a fixed level can drain the country's foreign exchange reserves, the stock of dollars and other currencies the RBI holds. Instead, it sells or buys dollars to smooth sudden moves and to stop traders from betting heavily on a further fall. In plain terms, the governor's message to markets is that the RBI will not prevent the rupee from finding its own level, but will not allow one-way bets or panic either.

The comments also link the currency to inflation. Malhotra said global inflation is elevated and that most economies have raised interest rates to fight it. With Indian inflation at 5.5% and driven largely by supply-side factors, such as costlier energy, a weak rupee can add to price pressures because imported goods cost more.

For businesses and investors, the statement means the exchange rate will remain market-driven with RBI intervention at the edges. Companies that import inputs or have dollar loans may need to hedge, meaning protect themselves against further currency moves through financial contracts.

Short-term: Currency traders are likely to read the remarks as a warning against heavy bets on a weaker rupee, since the RBI has said it will intervene when it sees speculation. Day-to-day movements in the rupee will still depend on oil prices, global interest rates and capital flows.

Long-term: Allowing the rupee to adjust while smoothing sharp moves helps protect India's foreign exchange reserves. But a persistently weaker rupee would keep imported inflation a concern for the RBI's interest-rate decisions.

Who is affected: Importers and exporters, oil and fuel consumers, students and travellers paying in dollars, families receiving remittances, companies with foreign loans, and investors in Indian markets.

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