RBI lets market carve rupee path: Governor

Managing volatility of the rupee is 'more of an art than science', he said

- Subhana Shaikh

Sanjay Malhotra said the Reserve Bank of India steps in only to curb excessive volatility, not to defend any specific line in the sand.

(PT)

Two days after the rupee briefly breached the 90-per-dollar mark for the first time, Reserve Bank of India (RBI) governor Sanjay Malhotra on Friday reaffirmed the central bank does not target any exchange-rate level and that it relies on market forces to determine its value.

The rupee opened at 89.84 against the greenback on Friday, but weakened again following the Monetary Policy Committee’s announcement of a rate cut before pulling back and then ending at 89.98.

RBI's rate-setting panel on Friday cut the policy repo rate by 25 basis points to 5.25% in a unanimous decision. The committee also retained the “neutral” policy stance, though external member Ram Singh was of the view that the stance should be changed to “accommodative”.