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2026-05-25 10:47:01
[Reserve Bank of India Governor Makes Rare Statement: Rupee Undervalued, No Exchange Rate Target Set] (1) Reserve Bank of India Governor Malhotra made a rare statement, saying that the rupee's recent depreciation is now reasonably considered not overvalued, and may even be undervalued. This is a rare direct comment from the central bank on the rupee's valuation. (2) Malhotra reiterated that the central bank does not set a target for any specific exchange rate level. The rupee has fallen by more than 6% this year, making it the worst-performing currency in Asia. (3) The rupee's weakness is mainly due to the combined effects of foreign capital outflows (exceeding $23 billion this year, surpassing last year's record) and the increased import bills caused by the Iran war pushing up oil prices. An indicator measuring the rupee's competitiveness fell to 90.96 in April, the lowest since at least 2014, indicating that the rupee may be undervalued.
