Ten months into his term, Reserve Bank of India Governor Sanjay Malhotra has sent a firm message to currency traders: while the rupee will be allowed some flexibility, speculative bets will face strong resistance. The currency jumped nearly 1% on Wednesday after the RBI intervened in both offshore and onshore markets, prompting short sellers to cover positions. This move halted speculation that the rupee might breach its record low of 88.80 per dollar; it was trading near 87.93 on Thursday.
Analysts said the RBI’s actions show a willingness to tolerate moderate movement but step in decisively when needed. With $700 billion in reserves, low inflation, and robust growth, the bank has both the capacity and determination to defend the rupee. MUFG Bank expects the currency to strengthen toward 87, while Kotak Mahindra Bank sees a range of 87.50–89.
The aggressive dollar sales surprised markets and curbed one-way bets, especially amid U.S. tariff pressure. The move coincides with renewed optimism about a U.S.–India trade deal, signaling economic confidence. Economists, however, see the latest intervention as a strategic, one-time measure rather than a permanent return to tight currency control.
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