RBI’s Malhotra: Indian Rupee may be undervalued

Lallalit Srijandorn FXStreet

Reserve Bank of India (RBI) Governor Sanjay Malhotra said that the Indian Rupee (INR) may now be undervalued following its recent depreciation, Reuters reported on Monday.

Malhotra further stated that the Indian central bank does not target any specific level for the currency, emphasizing that the RBI stands ready to intervene if speculative pressures build up.

RBI Governor said the central bank has enough tools in its kit, including nearly $700 billion in reserves to quell any undue speculative movement. He added that the RBI's primary mandate is to target inflation. "If the evolving inflation trajectory provides policy space, we support growth,” said Malhotra.

Market reaction

At the time of writing, the US Dollar Index (DXY) is trading 0.21% lower on the day at 95.45.

RBI FAQs

What is the role of the Reserve Bank of India?

The role of the Reserve Bank of India (RBI), in its own words, is "..to maintain price stability while keeping in mind the objective of growth.” This involves maintaining the inflation rate at a stable 4% level primarily using the tool of interest rates. The RBI also maintains the exchange rate at a level that will not cause excess volatility and problems for exporters and importers, since India’s economy is heavily reliant on foreign trade, especially Oil.

How do the decisions of the Reserve Bank of India affect the Rupee?

The RBI formally meets at six bi-monthly meetings a year to discuss its monetary policy and, if necessary, adjust interest rates. When inflation is too high (above its 4% target), the RBI will normally raise interest rates to deter borrowing and spending, which can support the Rupee (INR). If inflation falls too far below target, the RBI might cut rates to encourage more lending, which can be negative for INR.

Does the Reserve Bank of India directly intervene in FX markets?

Due to the importance of trade to the economy, the Reserve Bank of India (RBI) actively intervenes in FX markets to maintain the exchange rate within a limited range. It does this to ensure Indian importers and exporters are not exposed to unnecessary currency risk during periods of FX volatility. The RBI buys and sells Rupees in the spot market at key levels, and uses derivatives to hedge its positions.

Author

Lallalit Srijandorn

FXStreet

Lallalit Srijandorn is a Parisian at heart. She has lived in France since 2019 and now becomes a digital entrepreneur based in Paris and Bangkok.

AUD/USD consolidates above 0.6950 amid bullish USD

AUD/USD consolidates during the Asian session on Thursday, trading just above 0.6950 as traders await further developments surrounding the Middle East crisis. The Pentagon reportedly ordered readiness for potential strikes against Iran. This keeps the geopolitical risk premium in play, which, along with hawkish FOMC Minutes on Wednesday and elevated US bond yields, supports the bullish US Dollar and caps the currency pair.

USD/JPY slips below 158.00 as bulls turn cautious amid JPY intervention fears

USD/JPY retreats further from a one-and-a-half-week top, touched the previous day, and slid below 158.00 during the Asian session on Thursday amid speculation that authorities will step in to prop up the Japanese Yen. Meanwhile, the US Dollar sits near an 18-month high, supported by Wednesday's hawkish FOMC Minutes and the risk of a further escalation of tensions in the Middle East. This might continue to act as a tailwind for the currency pair.

Gold hangs near two-month low; seems vulnerable around $4,100

Gold struggles to capitalize on the overnight bounce from a two-month low, trading with a mild negative bias around $4,100 during Thursday’s Asian session. Hawkish FOMC Minutes reaffirmed bets for at least one more rate hike by year-end. Adding to this, elevated US bond yields weigh on the non-yielding bullion. The US Dollar further benefits from geopolitical uncertainties and sits near an 18-month high, undermining the commodity.

Cryptocurrencies face new security risk as Ethereum researcher warns of potential ECDSA break

Ethereum (ETH) researcher Justin Drake has urged the crypto industry to begin preparing for a potential breakthrough that could undermine the cryptographic systems securing digital assets. In an X post on Wednesday, Drake called on the industry to calmly enter what he described as “bunker mode.”

The US 10-year just hit a 2002 high. Does it give the US Dollar its next leg?

In 2026, the US Dollar Index, which measures the Dollar against six major currencies, has risen on days when Federal Reserve rate expectations pushed Treasury yields up and barely moved on days when something else did. The last stretch of the 10-year yield's climb to its highest since 2002 was the second kind.

The UK 30-year gilt just hit a 1998 high. Is that good or bad for the British Pound?

The yield on the UK's 30-year government bond, or gilt, went through 6% on October 1 for the first time since early 1998, and on Monday the Pound was at its strongest against the Euro since June 2025. The gilt market's 28-year high is mostly someone else's. Since early May, the 30-year gilt yield has risen about 0.15 of a percentage point and the US 30-year about 0.7.