More Stories

Informist, Tuesday, May 26, 2026

 

--Ashima Goyal: Need volatility in rupee market to improve price discovery

--CONTEXT: Former MPC member Ashima Goyal at CareEdge event in Mumbai

 

By Cassandra Carvalho and J. Navya Shruti

 

MUMBAI – The Reserve Bank of India's Monetary Policy Committee is likely to hold the repo rate steady at 5.25% at its meeting next month, Ashima Goyal, former external member of the rate-setting panel, said on the sidelines of a CareEdge debt market summit here Tuesday. Goyal expects the RBI to announce some measures to attract foreign inflows which do not affect market prices, she said. The timing of when the Monetary Policy Committee will raise the repo rate would be data-based, she said.

 

"Whenever there is so much volatility, you cannot predict what will happen in so many months," Goyal said. "I think markets have overpriced the possibility. They have priced in too many hikes, it's part of this over-reaction."

 

At a panel discussion during the event, Goyal said volatility is necessary in the foreign exchange market for markets to "discover the rupee". However, maturity among market participants and some amount of other intervention is required, since "markets get very, very perturbed" when foreign exchange reserves fall, she said.

 

The main reason for India requiring excess foreign exchange reserves is for hedging by traders who expect the rupee to depreciate, the former Monetary Policy Committee member said. Foreign exchange buffers are meant to be used in years which see foreign fund outflows and global shocks or risk-off sentiment, such as the current times, she said.

 

"If you allow for that smoothening and recognise that there is no major shortfall in resources, then FPI (foreign portfolio investment) is very welcome, it adds to the resources available for investment. But that maturity does not seem to be there. There's a sort of year of outflows and reserve loss," Goyal said.  End

 

Edited by Rajeev Pai

 

For users of real-time market data terminals, Informist news is available exclusively on the NSE Cogencis WorkStation.

 

Cogencis news is now Informist news. This follows the acquisition of Cogencis Information Services Ltd. by NSE Data & Analytics Ltd., a 100% subsidiary of the National Stock Exchange of India Ltd. As a part of the transaction, the news department of Cogencis has been sold to Informist Media Pvt. Ltd.

 

Informist Media Tel +91 (22) 6985-4000

Send comments to feedback@informistmedia.com

 

© Informist Media Pvt. Ltd. 2026. All rights reserved.