Reserve Bank of India (RBI) Governor Sanjay Malhotra on Wednesday, October 15, said the rupee’s movement against the US dollar is being driven by macroeconomic fundamentals rather than any policy intervention, stressing that the central bank does not target any specific level or band for the currency.Malhotra was speaking at the IMF’s “Governor Talks” session in Washington DC, to discuss India’s monetary and financial policies for emerging markets in an uncertain global landscape.The RBI chief noted that the US dollar has depreciated about 10% from its peak this year, while the rupee has not appreciated as much as other major currencies—a reflection, he said, of higher tariffs and capital outflows.
“In some sense, it’s also a correction,” the Governor said, referring to the rupee’s earlier period of outperformance. “Our effort is to ensure an orderly movement of the rupee on both sides. Any undue or abnormal volatility is curbed.”Malhotra also stressed that India’s forex markets are deep and mature and the exchange rate will ultimately be determined by fundamentals, including capital and current account flows.On the domestic economy, Malhotra said India has managed global shocks well, with inflation now below the RBI’s target band (in fact, at an eight-year low) aided by coordinated fiscal and monetary action.Growth remains robust at a projected 6.8%, he said, adding that fiscal consolidation and cooperation between the Centre and states have strengthened macro stability.Responding to questions on private investment, Malhotra said capacity utilisation is improving and sectoral green shoots are visible, though uncertainty continues to hold back “animal spirits” among households and businesses.On trade concerns, he said higher tariffs are not a major risk to growth, given India’s domestic-driven economy, but acknowledged that a resolution of trade issues could provide further upside to the 6.8% growth projection.
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