The Indian rupee has been under sustained pressure due to the conflict in West Asia, rising crude oil prices, and global uncertainties. On October 7, 2026, the rupee depreciated by 22 paise to 96.57 against the US dollar in early trade. RBI Governor Sanjay Malhotra stated that the rupee may be undervalued but assured that the Reserve Bank of India (RBI) will work to stabilize the currency and help it find its correct value.
- The rupee has faced pressure from geopolitical conflicts and higher crude oil prices.
- Rupee depreciated to 96.57 against the US dollar on October 7, 2026.
- RBI Governor Sanjay Malhotra said the rupee may be undervalued but will stabilize it.
- RBI supports orderly movement of the rupee to avoid excessive volatility.
- RBI introduced concessional swap facilities to ease pressure on the rupee.
- Deputy Governor Poonam Gupta also noted the rupee could stabilize and appreciate.
Why has the Indian rupee been under pressure recently?
The rupee has faced significant pressure due to the ongoing conflict in West Asia, which began in late February 2026. This conflict has caused crude oil prices to spike, posing challenges for India as an oil-importing country. Additionally, global economic uncertainties have contributed to the rupee's depreciation against the US dollar.
What actions has the RBI taken to support the rupee?
To counter the fall in the rupee's value, the RBI introduced a concessional swap facility aimed at diaspora deposits and bond issuances. This facility helped banks mobilize nearly USD 133 billion under the FCNR(B) deposits, which temporarily eased pressure on the currency. Despite these measures, the rupee has continued to face depreciation in recent sessions.
What did RBI Governor Sanjay Malhotra say about the rupee's value?
Governor Malhotra acknowledged that many estimates, including the Real Effective Exchange Rate (REER), suggest the rupee is not overvalued and may actually be undervalued. He emphasized that while markets can behave irrationally in the short term, they tend to reflect their true value over the long term. The RBI is committed to ensuring the rupee stabilizes and finds its correct value, supporting an orderly movement to avoid excessive volatility.
How does the RBI plan to manage rupee volatility?
The RBI plans to support the rupee by ensuring its stabilization and orderly movement. This approach aims to help the currency reach its correct value without experiencing excessive fluctuations that could harm the economy. The central bank's interventions are designed to balance market forces while protecting the rupee from sharp declines.
What are the views of other RBI officials on the rupee?
Deputy Governor Poonam Gupta expressed similar views on September 24, 2026, stating that there is a case for the rupee to stabilize and appreciate going forward. This aligns with the RBI's overall strategy to support the currency amid external pressures.
Frequently Asked Questions
Q: Why is the rupee depreciating against the US dollar?
A: The rupee is depreciating mainly due to the West Asia conflict, which has increased crude oil prices, and due to global economic uncertainties affecting currency markets.
Q: What measures has the RBI taken to support the rupee?
A: The RBI introduced concessional swap facilities for diaspora deposits and bond issuances, helping banks raise significant foreign currency deposits to ease pressure on the rupee.
Q: Is the rupee overvalued or undervalued?
A: According to RBI estimates and the Real Effective Exchange Rate, the rupee is not overvalued and may be undervalued at present.
Q: How will the RBI ensure the rupee's stability?
A: The RBI will support an orderly movement of the rupee to help it find its correct value while preventing excessive volatility in the currency markets.
