A stable rupee vs dollar fuels speculation of RBI returning to old playbook
October 13, 2025
The RBI has built up short dollar positions of at least $15 billion in the non-deliverable forwards market over the past two to three weeks to defend the rupee.| Business News
The one-month volatility in the INR-USD pair has crashed to the year’s lowest level in October. The currency has been stuck in a narrow range, struggling to break past the 89-per-dollar mark after hitting fresh lows.
The move marks a shift in tone under RBI Governor Sanjay Malhotra, who since taking charge in December had allowed the rupee to move more freely— in contrast to his predecessor Shaktikanta Das’s tight grip on the currency.
“The RBI is probably uncomfortable with the pace of weakness seen over the past few months,” said Michael Wan, senior currency analyst at MUFG Bank. “It’s probably a signal to the market in the near-term that RBI doesn’t want dollar-rupee to cross 88.80 levels, but it’s not sacrosanct by any means.”
The RBI didn’t respond to an email seeking comments.
In this month’s monetary policy, Malhotra said the central bank was keeping a close watch on the rupee’s movements and would take “appropriate steps” as warranted.
“The RBI doesn’t like a volatile exchange rate, especially in times where risks can invigorate speculative interests,” said Dhiraj Nim, forex strategist at ANZ Bank in Mumbai.
The central bank is in a growth supportive mode and a volatile currency with a depreciation bias is a bigger constraint on the domestic monetary policy where the room to manoeuver is limited, he said.
The move marks a shift in tone under RBI Governor Sanjay Malhotra, who since taking charge in December had allowed the rupee to move more freely— in contrast to his predecessor Shaktikanta Das’s tight grip on the currency.
“The RBI is probably uncomfortable with the pace of weakness seen over the past few months,” said Michael Wan, senior currency analyst at MUFG Bank. “It’s probably a signal to the market in the near-term that RBI doesn’t want dollar-rupee to cross 88.80 levels, but it’s not sacrosanct by any means.”
The RBI didn’t respond to an email seeking comments.
In this month’s monetary policy, Malhotra said the central bank was keeping a close watch on the rupee’s movements and would take “appropriate steps” as warranted.
“The RBI doesn’t like a volatile exchange rate, especially in times where risks can invigorate speculative interests,” said Dhiraj Nim, forex strategist at ANZ Bank in Mumbai.
The central bank is in a growth supportive mode and a volatile currency with a depreciation bias is a bigger constraint on the domestic monetary policy where the room to manoeuver is limited, he said.