Resist temptation to defend ₹ at any cost: Raghuram Rajan cautions India against excessive use of forex reserves
Economic Times 1 hr ago·27 Oct 2026, 8:29 am
Former RBI Governor Raghuram Rajan has advised the government against aggressively defending the rupee's value using foreign exchange reserves. He argues that a weaker currency is not necessarily bad news for India. Instead, a depreciating rupee can help boost exports by making Indian goods more affordable for foreign buyers, potentially improving the country's trade balance.
This shift in policy stance is significant for investors as it signals a move away from interventionist measures. It suggests that the rupee will be allowed to find its own level in the market. For now, the focus is on managing the economic impact of a weaker currency rather than trying to prop up its value artificially.
Investors should watch the central bank's future interventions and the government's response to the current depreciation. A stable but weaker rupee could be part of a broader strategy to support growth, but it also brings challenges regarding inflation and import costs that need careful monitoring.
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