RBI Terms Rupee Volatility Modest; Sees Tariff Headwinds Ahead

New Delhi, Aug 7 (KNN) Reserve Bank of India (RBI) Governor Sanjay Malhotra on Wednesday downplayed concerns over recent fluctuations in the rupee, stating that the currency’s movement remains relatively contained when viewed against the backdrop of broader global volatility.

“There will be some volatility in the rupee, as we are living in uncertain times,” Malhotra said at the post-monetary policy press conference. “But this is not unique to the Indian currency— even the US dollar has seen two-way movements of nearly 10 percent. In that context, the rupee’s movements are relatively modest,” he added, according to Business Standard.

The RBI governor also addressed concerns that the country’s oil trade with Russia—now subject to steep US tariffs—might lead to inflationary pressures. 

He noted that while crude oil is a key inflation driver, the impact of altering the oil import mix is likely to be limited in the near term. 

“India sources oil from various countries. Any rebalancing will depend on global prices and how much is absorbed or adjusted via fiscal mechanisms like excise duties,” he said, adding that the government is expected to intervene if needed to mitigate shocks.

Following the RBI’s decision to maintain the benchmark repo rate at 5.5 percent, the rupee appreciated marginally, closing at 87.74 against the US dollar, compared with 87.80 the previous day. 

However, currency dealers warned that the outlook for the rupee remains clouded by new trade tensions with the US.

(KNN Bureau)