RBI doesn't target rupee level, fall due to dollar demand: Guv Malhotra
New Delhi, Nov 20, 2025
The RBI Governor says rupee's fall is due to dollar demand, not policy moves, assures strong forex buffers and highlights improving strength of Indian banks
Reserve Bank of India (RBI) Governor Sanjay Malhotra on Thursday said the central bank does not aim for any specific value of the rupee and that its recent fall against the US dollar is mainly driven by higher demand for the American currency.
Speaking at an event at the Delhi School of Economics (DSE), he explained that the movement in the rupee is a result of market forces. “We do not target any level. Why is the rupee depreciating? (It) is because of the demand...It's a financial instrument, and there is a demand for dollars, and if the demand for dollars goes up, the rupee depreciates; if the demand for rupee goes up, dollar comes down, then it appreciates,” Malhotra said.
The governor noted that India’s foreign exchange reserves are healthy and provide ample protection. He said the Reserve Bank has “very good” buffers of forex reserves and there is no reason to be concerned about the external sector.
What is the RBI’s policy priority right now?
Malhotra also highlighted the central bank’s broader policy focus. He said the “foremost priority of the RBI is to ensure financial stability in the system”, adding that the central bank is working to simplify regulatory requirements where possible “while maintaining necessary safeguards and guardrails”.
He added that the central bank continues to closely monitor risks. “RBI vigilant, alert to emerging risks and evolving conditions,” he said.
What market factors are weighing on the rupee?
Responding to a question on the recent depreciation of the rupee, he said the pressure is largely trade-related and influenced by US tariff developments. He expressed confidence that India will secure a “good trade deal” with the United States, which he said would ease the strain on the country’s current account balance.
On Thursday, the rupee fell by 23 paise to close at 88.71 against the US dollar. Traders attributed this to the dollar’s strong rally past the 100 level and to reduced expectations of a US Federal Reserve rate cut in December after the release of the Fed’s latest meeting minutes.
What did Malhotra say about Indian banks?
In response to a question on the performance of domestic banks, Malhotra said the outlook for the Indian banking sector is strong. “The way Indian banks are performing, very soon a few of them will be among the top 100 global lenders,” he said.
[The Business Standard]
