Rupee Weakness Within Historical Range, Economy Well-Placed: RBI Governor

RBI Governor Sanjay Malhotra has played down concerns over the recent depreciation of the rupee, saying the current trend is broadly in line with historical patterns and is unlikely to have a significant impact on the Indian economy.

Malhotra said he expects the pace of depreciation to remain comparable to what India has seen over the past two decades. The rupee has weakened by around 3 per cent annually over the last 10 years and about 3.4 per cent per year over the previous 20 years, he said in an interview with India Today.

The Indian currency has hit multiple record lows in 2025, pressured by a stronger US dollar, sustained foreign portfolio outflows and uncertainty surrounding the proposed India–US trade tariff deal. On December 16, the rupee

slipped to an all-time low of 91.16 against the US dollar. So far this year, it is down 4.68 per cent, making it the worst-performing currency among its Asian peers.

Market participants have also pointed to a relatively less aggressive intervention strategy by the Reserve Bank of India, a shift that analysts attribute partly to subdued domestic inflation. Addressing this, Malhotra said the RBI allows market forces to determine the appropriate level of the rupee against other currencies.

“Our aim is to primarily curb any kind of undue or excessive or abnormal volatility or any kind of unnecessary speculation getting built into the prices. That is when we come in,” he told India Today.

Despite weak sentiment in the currency market and concerns that a softer rupee could widen trade imbalances, the RBI governor expressed confidence in India’s external sector strength. His comments come against the backdrop of improved trade data for November.

India’s trade deficit narrowed to a five-month low of $24.53 billion in November, helped by lower imports of gold, oil and coal. Exports to the US rose nearly 10 per cent on a month-on-month basis and over 21 per cent year-on-year during the month.

Malhotra highlighted that India currently has an import cover of about 11 months for goods and around 92 per cent coverage of its external debt. “Our external debt is about $750 billion, and we have about $690 billion of forex reserves. So, we are very comfortable in meeting our external sector liabilities, whether in the current account or on the capital account,” he said.

Overall, Malhotra’s remarks underline the central bank’s view that while the rupee may remain under pressure in the near term, India’s macroeconomic buffers are strong enough to absorb external shocks without destabilising the broader economy.