RBI Deputy Governor Says Rupee's Slide May Be Temporary, Sees Room for Appreciation

Reserve Bank of India Deputy Governor Poonam Gupta said on Wednesday that the rupee's prolonged slide against the dollar could prove temporary, arguing that the currency has room to stabilise and potentially appreciate as India's external position improves in the months ahead.

A Currency Under Pressure

The rupee has depreciated by about 13.1 percent over the past year and a half, a stretch that has kept pressure on importers, raised the cost of servicing dollar-denominated debt, and fed periodic speculation about further central bank intervention. Gupta's remarks, made at a public event, offered one of the more detailed defences yet from the central bank of why it sees the currency's weakness as a phase rather than a structural shift.

Why the RBI Sees Room for a Turnaround

Gupta pointed to India's capital account as a likely source of support, saying she expects flows to turn more favourable, plausibly later in the current financial year, as global investors return to emerging markets and domestic reforms continue to draw foreign direct investment. She also cited a set of structural strengths she said underpin the rupee over the medium term: real GDP growth in the range of 7 to 8 percent, nominal growth of 11 to 12 percent, a gathering domestic investment cycle, and healthy balance sheets across banks and large corporates.

Improving merchandise exports and a gradual reduction in the economy's dependence on imported oil were also flagged as factors that could narrow India's current account gap over time, reducing one of the structural sources of pressure on the currency. Taken together, Gupta argued, these trends could allow the rupee to not just hold its current level but appreciate from here.

What It Means for Markets and Businesses

A steadier or stronger rupee would ease costs for Indian companies with foreign-currency borrowings and imported input costs, from oil marketing companies to electronics and capital goods importers, while making it somewhat less attractive for exporters who have benefited from a weaker currency. It would also reduce the case for aggressive RBI intervention in the currency market, freeing up foreign exchange reserves that have been used periodically to smooth volatility.

Currency traders, however, are likely to treat the comments as a signal of the central bank's medium-term thinking rather than an immediate turning point, since near-term rupee moves remain heavily influenced by global factors such as US interest rate policy, crude oil prices and foreign portfolio flows into Indian equities and bonds. Gupta's remarks come at a time when the RBI has been keen to project confidence in the economy's external buffers even as global uncertainty, including elevated oil prices, continues to weigh on emerging-market currencies broadly.

This is an original summary based on public reporting. See our editorial policy for how we source, write, and correct our stories.