“Whether it is an up movement or down—depreciation or appreciation—we generally stay away,” Malhotra said, adding that intervention would be considered only if speculative pressures or abnormal volatility emerge
The Reserve Bank of India (RBI) will stay away from routine movements in the foreign exchange market and step in only if volatility turns excessive, Governor Sanjay Malhotra said on Friday.
Announcing the monetary policy decision, the RBI kept the benchmark repo rate unchanged at 5.25 per cent. The Monetary Policy Committee (MPC), which met from February 4 to 6, voted unanimously to hold rates.
Malhotra reiterated that the RBI does not target any specific level of the rupee.
“Whether it is an up movement or down—depreciation or appreciation—we generally stay away,” he said, adding that intervention would be considered only in the event of abnormal volatility or a speculative build-up.
At present, there are no signs of speculative pressures even as the rupee has appreciated in recent sessions, the governor said. The central bank will allow market forces to determine the currency’s trajectory.
Rupee steady after policy status quo
The rupee remained steady after the policy announcement.
The domestic currency, which opened at around 90.23 against the US dollar, was trading at 90.70 around 2 pm, compared with its previous close of 90.36.
Earlier this week, the rupee strengthened sharply following the announcement of a trade deal between India and the United States. However, persistent dollar demand from local importers capped gains and prevented the currency from breaching the ₹90-per-dollar mark.
MPC keeps policy settings unchanged
Besides the repo rate at 5.25 per cent, the standing deposit facility (SDF) rate remains at 5 per cent. The marginal standing facility (MSF) rate and the Bank Rate stand at 5.50 per cent.
The central bank said the near-term domestic growth and inflation outlook remains positive, even as global headwinds intensify.
Vivek Iyer, Partner and Financial Services Risk Leader at Grant Thornton Bharat, said the policy marks a clear shift in emphasis.
“Taken together, the MPC announcements signal a clear pivot by the RBI from headline monetary easing to targeted regulatory and structural interventions. By holding rates steady while rolling out a wide set of non-rate measures, the RBI is reinforcing that credit transmission, consumer protection and market depth can be strengthened without immediately relying on rate cuts,” he said.
He added that tighter guardrails around mis-selling, recovery practices and digital fraud protection would help build trust in the financial system as digital payments scale up.
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