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Informist, Friday, Feb. 6, 2026

 

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--RBI Malhotra: Don't intervene on normal rupee movement, stay away 
--RBI Malhotra: Concerned with any excessive, undue volatility in rupee 
--RBI Malhotra: Don't target any level for rupee 
--RBI Malhotra: US trade pact impact on rupee to depend on deal's details 
--RBI Malhotra: US bond holdings down due to fall in FX reserves 
--RBI Malhotra: No reduction in holding of US treasuries 
--RBI Malhotra: Trade pacts to further help already comfortable current acct 
--RBI Malhotra: Trade deals are on top of very, very comfortable current account 

 

MUMBAI – The impact of the trade deal between India and the US on the rupee depends on the details of the pact once it is signed, Reserve Bank of India Governor Sanjay Malhotra said Friday. "The trade deal has not happened yet, it has just been announced. You have seen how much rupee has strengthened after the announcement," he said at the post-policy press conference. "Once trade deal happens, it (rupee) will depend on what the details of the trade deal are." 

 

On Monday, India and the US announced a trade deal, which reduced US tariffs on Indian goods to 18% from 50%. Following the trade deal announcement, the Indian currency surged 1.4% against the dollar Tuesday, posting its biggest single-day gain in over seven years. The two countries will issue a joint statement within four or five days, Commerce Minister Piyush Goyal said on Thursday. 

 

Malhotra added that the multilateral trade deals signed by the government will help support an already "very, very comfortable current account". India and the European Union last month agreed to a free trade agreement, touted as the "mother of all deals".

 

"On top of this, with all these deals, agreements, it should only further help, not only on the current account, on the trade side, merchandise and services, but also on the investment side, because a lot of them have investment commitments," he said. The governor expects robust services exports and healthy inward remittance receipts to keep India's current account deficit for 2025-26 (Apr-Mar) moderate and sustainable.

 

Malhotra reiterated that the central bank does not target any level of the rupee and only intervenes when there is any undue volatility or excessive volatility in the exchange rate. "We don't intervene normally. Whether it is up movement or down, depreciation or appreciation, we don't generally, we stay away," he said. 

 

He, however, added that it does not mean that the RBI will stay away from the currency market even if there are speculative bets getting built in in the currency market. "When there is an appreciation of the rupee happening, I don't see, as of now, or even going forward, I do not see any kind of a speculative element getting built in," he said. "So, if it is not there, we will let the markets play out and see where the rupee is headed, whether it is with respect to the dollar, or whether it is with respect to any other currency."

 

Malhotra also clarified that the recent decline in the RBI's holding of the US Treasury was on the back of a reduction in India's foreign exchange reserves and not because RBI is selling its holdings. "Our forex reserves had come down. So as a result of that, all holdings would come down, so they will change," he said. "So those are fluctuations on a day-to-day or a week-to-week basis that we give out. But there is no reduction in our holdings of the US treasury." 

 

India's holdings of US Treasury had dropped to $186.50 billion as of November, sharply down from $234 billion in November 2024, according to data by the department of US Treasury.  End

 

US$1 = INR 90.66

 

Reported by Pratiksha

Edited by Vandana Hingorani

 

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