RBI May Continue Rupee Defence as Govt Seeks Stability

The Reserve Bank of India (RBI) is expected to continue defending the rupee, with the government expressing confidence that the central bank's strategic interventions would stagger the pace of slide, according to a senior official.

- Shayan Ghosh & Puja Mehra

There is no change in the forex policy of the central bank despite several quarters believing that under the new governor Sanjay Malhotra, RBI would not aggressively defend the rupee, said the official, citing discussions between the government and the RBI on the currency slide.

The Indian rupee has weakened about 3.5% against the dollar in the past six months to 86.88 on 7 March, as per data from Bloomberg. By comparison, the Chinese Yuan and the Japanese Yen weakened 1.7% and 0.7%, respectively, during the period.

"The government does not want the currency to depreciate too much," the official told Mint, speaking on the condition of anonymity. The official said that the government and RBI are hopeful that the rupee will eventually climb back to December levels and that India's forex reserves are sufficient to defend it.