"Markets Will Determine Prices": RBI Governor To NDTV Profit On Falling Rupee

The Rupee slipping past the Rs 90-per-dollar mark has been a psychological shock on the people. Sanjay Malhotra -- who replaced Shaktikanta Das recently as the Governor of the Reserve Bank of India -- said the Indian market is robust and will determine prices.  

Making it clear that the RBI will not step in to stabilise the situation, Malhotra, in an exclusive interview with NDTV Profit's Tamanna Inamdar, said for years, it has been the RBI's policy to just "curb excessive volatility".

Asked if the Reserve Bank had to come in and intervene in the last couple of months on the Rupee, he said: "The RBI's policy on Rupee and exchange rates has been consistent over the years. We believe that the markets are quite robust, they are quite deep, they are quite wide. And so we believe the markets will ultimately determine the prices." 

"The macroeconomic fundamentals of the Indian economy are very strong. Growth is high, inflation is low. We have sufficient foreign exchange reserves, $690 billion or so, and the current account deficit is also, you know, very manageable," he said. "So on the whole, on the external front, we are very comfortable," he said.

"There will be fluctuations-- there will be fluctuations in the movement of price. It will not be a linear movement. There will be ups and downs. If you look at over a longer period, we have depreciated by about 3%," he added.

The Rupee had slid in November owing to several factors -- including the extra tariff hike imposed by the US in August that brought down export revenue. 

The other factors that led to the situation included a surge in imports, especially gold and silver, and a drop in foreign investment.