Exchange Rates

Finance Minister Nirmala Sitharaman on Tuesday said the rupee's value against the US dollar is market-determined and there is no target or specific band for the domestic currency. "The government closely tracks the trends in key economic parameters, including exchange rate movements, along with their implications for economic growth and fiscal stability. These issues are discussed at various fora at various levels of the government," she said in a written reply in the Rajya Sabha. On Tuesday, the rupee pared initial losses and settled 12 paise higher at 96.24 (provisional). Traders attribute the recovery to RBI's intervention. Sitharaman said the value of the rupee is market-determined, with no target or specific level or band, and RBI regularly monitors the foreign exchange market and intervenes in situations of excess volatility. Further, the RBI monitors key developments across the globe which may have an impact on the USD-INR exchange rate, she said. Various measures have been

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India's economy is growing faster than peers, but a weakening rupee may delay its move past Japan to become the world's fourth-largest in dollar terms

The Indian rupee slipped past ₹90 per dollar in December 2025, down 4.9% for the year, underperforming peers amid volatile capital flows and uneven forex support

Factoring in only domestic inflation could lead to a shortfall

When seen historically, India's exchange rate arrangement, both de-facto and de-jure, was floating from 1999 to 2022 (independent, managed, and floating)

RBI deputy governor Poonam Gupta says the IMF's 'crawl-like' label is a sub-classification based on recent volatility data, and does not change India's managed-float exchange rate regime

For the same amount remitted, compare how much the recipient will get across different service providers

There is high negative correlation between the India 10-year and US 10-year bond yield spread and rupee-dollar exchange rate

One way to assess how much you paid is to compare the amount sent with the amount received

Traders now eye the US Federal Reserve meeting outcome for further cues on dollar movement, said dealers

The IMF had first moved to the "stabilised" classification for India from "floating" in December 2023

The Indian currency's rapid fall from 85 to 86 in just 16 days, and from 86 to 87 in another 15 days, highlights the volatility in the foreign-exchange market during those months

The RBI must come out with an official explanation, but until it does, we can only guess. But there are a few reasonable hypotheses

RBI showing greater tolerance for exchange rate under Governor Malhotra

Policymakers can get export growth for some time through subsidies, whether a production-linked incentive or a falsified exchange rate

REER represents the inflation-adjusted, trade-weighted average value of a currency against its trading partners