RBI Doesn’t Target Rupee Level, Says Governor

Mumbai: The Reserve Bank of India (RBI) governor Sanjay Malhotra on Thursday said that the central bank does not target any level of the Rupee and attributed the latter's slide to the US dollar demand. He also emphasised that the RBI’s foreign exchange reserves remain “very good,” reinforcing that India’s external position is stable and well-buffered.

“We do not target any level. Why is the rupee depreciating? it is because of the demand. It is 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 while responding to a query after delivering the VKRV Rao Memorial Lecture at the Delhi School of Economics.

He also exuded confidence that India will have a “good trade deal” with the US, and that would relieve the pressure on the country’s current account balance. On Thursday, the rupee depreciated 23 paise to close at 88.71 against the US dollar on broad strength of the American currency and fading odds of a rate cut by the US Federal Reserve. Forex traders said the dollar has staged a rally, moving above the 100 level, after the US Federal Reserve minutes indicated that most officials were opposed to a rate cut in December, following the October cut.

Responding to another query on the banking sector, Malhotra said that the way Indian banks are performing and very soon a few of them will be among the top 100 global lenders given the pace of economic expansion and growth in the banking system. Currently, only State Bank of India (SBI) and HDFC Bank appear among the world's top 100 banks, ranked 43rd and 73rd, respectively.

He also said that the central is adopting a cautious approach towards cryptocurrencies and stablecoins. “Stablecoins, cryptos, they have a huge risk, and so we are adopting a very cautious approach towards it,” he said.