The above observation comes against the backdrop of the rupee breaching the 90 mark against the dollar a few days ago.
“We believe that the markets are very efficient in the long term. It is a very deep market. We have seen this earlier in February, the rupee against the dollar had risen to almost 88 and within a period of three months it had fallen back below 84,” the governor said at a press meet after the monetary policy.
The Governor emphasized that fluctuations in USD/INR volatility do occur and can occur.
“Our efforts have always been to reduce any abnormal or excessive volatility and that is what we will continue to do. Our external sector, as I also mentioned in my statement, is very strong…,” Malhotra said.
India’s current account deficit fell from 2.2 percent of GDP in the second quarter of 2024-2025 to 1.3 percent in the second quarter of 2025-2026, thanks to robust services exports and strong remittances.
Malhotra noted that healthy services exports, coupled with strong remittances, are expected to keep CAD modest through 2025-2026. As of November 28, 2025, India’s foreign exchange reserves stood at $686.2 billion, providing robust import coverage for over eleven months.
“Overall, India’s external sector remains resilient. We are confident that we can comfortably meet our external financing needs,” he said.
The Governor underlined that India has sufficient reserves; the current account is very manageable at around 1 percent.
“And given the strong fundamentals of our country, we should get good capital flows… So, I think, we are in a very comfortable situation as far as the position of the external sector is concerned,” he said.
Published on December 5, 2025
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