Business · Economy · 6 hrs ago
Former RBI governor says rupee should find its market level
Former Reserve Bank of India governor D Subbarao says the RBI should let the rupee find its market level rather than trying to hold it at a specific rate.
He argues that efforts to push the currency away from its economic fundamentals will be costly and will not last.
The rupee recovered nearly 2% from near-record lows last week after the central bank introduced measures to curb demand for dollars and bets against the currency.
Subbarao says those steps helped, but capital outflows are a deeper cause of the rupee's decline.
He also says international investors see India as less predictable because of how regulations and tax laws are interpreted.
In his view, durable investment based on India's fundamentals is what can support the rupee over time, while the RBI should manage its movement rather than target a fixed level.
Former Reserve Bank of India governor D Subbarao said the rupee should find its market level while the central bank manages its trajectory.
He said attempts to hold the currency at a level that does not reflect economic fundamentals would be costly, distortionary and ultimately futile.
The rupee recovered nearly 2% from near-record lows of 96-97 per dollar last week after the central bank introduced measures to curb dollar demand and speculative bets.
Subbarao said durable capital flows based on fundamentals, rather than borrowed resources, would help the rupee strengthen.
He also pointed to capital outflows and investor concerns about unpredictable regulation and tax-law interpretation as structural issues.
- Who
- Former RBI governor D Subbarao.
- What
- He said the rupee should find its market level, with the RBI managing its trajectory rather than targeting a particular level.
- When
- He made the remarks in an interview published on October 18, 2026.
- Where
- Dubai.
- Why
- He said trying to correct the rupee against economic fundamentals would be costly, distortionary and ultimately futile.
This story does not have two clearly opposing sides.
The FCNR(B) dollar-deposit window closed after mobilising about $133 billion.
The central bank introduced measures to curb dollar demand and speculative bets against the rupee.
The rupee recovered nearly 2% from near-record lows of 96-97 per dollar.
The Economic Times published Subbarao's remarks in an interview.
- Former RBI governor
- D Subbarao
- RBI governor term
- 2008 to 2013
- Rupee recovery
- Nearly 2%
- Recent low
- 96-97 per dollar
- FCNR(B) deposits
- About $133 billion by the window close on August 31
What people are saying
The RBI should allow the rupee to find its level while managing the trajectory, rather than trying to control it at a particular level
Ultimately the exchange rate is a function of market expectations and demand and supply.
Capital outflows have been a structural cause of the rupee's depreciation
One of the complaints I hear from international investors who look at opportunities across the world is that India is less predictable and more arbitrary in its regulation and interpretation of tax laws