India’s central bank will tolerate a weaker rupee as dollar inflows dwindle, sources say. The currency hit a record low of ₹90 per US dollar, pressured by foreign outflows and global interest rates. RBI aims to limit volatility, prioritizing economic resilience over defending a fixed exchange rate.
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India’s central bank, the Reserve Bank of India (RBI), is expected to tolerate a weaker rupee as foreign dollar inflows slow, according to sources familiar with the matter. The rupee recently breached the ₹90 per US dollar mark, hitting a record low amid global and domestic pressures.
Key Highlights
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Policy stance: RBI is likely to avoid aggressive intervention, focusing instead on curbing volatility rather than defending a specific exchange rate.
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Market pressures: The decline stems from foreign investor outflows, elevated US interest rates, and sustained dollar demand by banks and oil firms.
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Trade gap concerns: A widening trade deficit and dwindling capital inflows have intensified pressure on India’s external sector.
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Currency performance: The rupee has fallen over 5% year-to-date, making it Asia’s worst-performing currency in 2025.
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Analyst view: Experts note that while the rupee’s slide raises import costs and inflation risks, India’s currency remains relatively stable compared to peers, with RBI prioritizing economic resilience over strict currency defense.
This approach underscores the RBI’s balancing act—managing inflation and growth while allowing the rupee to adjust naturally to global headwinds.
Sources: Reuters via U.S. News, LiveMint, Economic Times
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