RBI MPC meeting:
Forex policy has remained consistent, does not target any exchange rate, says Governor Sanjay Malhotra

Feb 7, 2025

Synopsis
RBI Governor Sanjay Malhotra stated that the bank's forex policy favors stable market operations without targeting any specific exchange rate. The Rupee hit a record low of 87.5825 before closing at 87.5775. RBI reduced the repo rate by 25 basis points to 6.25 percent, maintaining a neutral stance. India's GDP growth projection was adjusted to 6.7 percent.

Reserve Bank of India Governor Sanjay Malhotra on Friday said the bank's forex policy has remained consistent, in favour of orderly and stable market operation and it does not target any exchange rate.

India's foreign exchange reserves as of January 31 stood at $630.6 billion, providing an import cover of over 10 months, Malhotra said.

The forex reserves had increased to an all-time high of USD 704.885 billion in end-September.

The reserves had been on a declining trend for the last few weeks, and the drop has been attributed to revaluation, along with forex market interventions by RBI to help reduce volatilities in the rupee.

The Rupee declined to a record low of 87.5825 during the session on Thursday before closing at 87.5775, down 0.1 per cent on the day and more than 2 per cent so far this year.

RBI announced a 25 basis point reduction in the repo rate, lowering it to 6.25 per cent. This was the first cut in five years.

Malhotra revealed that the committee also decided to maintain a neutral stance, a shift made in October of the previous year, indicating a flexibility to adjust policy rates in response to the evolving economic environment.

Further, the central bank projected India's GDP grow at 6.7 per cent, down from 6.9 per cent.

[The Economic Times]