Rupee undervalued; RBI Guv says will ensure stability in INR, helping it find its correct value

Stating that the rupee may be “undervalued” as per many estimates, Governor Sanjay Malhotra on Wednesday, October 7, assured that the Reserve Bank of India will ensure that the currency “stabilises” and will support it in reaching its “correct value”.

“We will ensure that the rupee stabilises, that the rupee finds its correct value, and we will support an orderly movement of the rupee in finding its correct value and at the same time in ensuring that there is no excessive volatility,” the Governor told reporters at the central bank headquarters here.

He was replying to a specific question about the rupee inching towards its all-time low of 96.96 against the dollar during intraday trading on Wednesday.

It can be noted that the domestic currency has been under pressure for much of this year, especially since the beginning of the West Asia conflict in late February, resulting in a spike in crude oil prices, which poses a direct challenge to an oil-importing country like India.

To counter the fall, the RBI introduced a concessional swap facility for diaspora deposits and bond issuances. Banks have mobilised nearly $133 billion under the FCNR(B) deposits facility alone, which lifted the pressure on the currency in the markets for a few days. However, the currency is back under pressure and has depreciated in the last few sessions.

“By a number of estimates, including the REER (Real Effective Exchange Rate), the rupee is not overvalued; it may be undervalued,” Malhotra said on Wednesday.

The remarks follow similar comments from Deputy Governor Poonam Gupta on September 24, who opined that there is a case for the rupee to stabilise and appreciate from here on.

Rupee vs dollar on Oct 7

The Indian rupee weakened to 97.15 against the benchmark US dollar during the trading session on Wednesday, hitting its lowest level since May 20, 2026, as investors focused on the Reserve Bank of India’s monetary policy meeting outcome amid global headwinds and higher dollar demand in the market.

During Wednesday’s market, the Indian currency weakened to its day’s low level of 97.15 against the global currency due to the elevated demand for the greenback in the global market amid heightened market uncertainty.