Reserve Bank of India Governor Sanjay Malhotra, in his October Monetary Policy Committee (MPC) statement, acknowledged the latest challenges faced by the Indian currency.
Malhotra explicitly acknowledged that "notwithstanding the robust domestic macroeconomic fundamentals, the Rupee has witnessed some depreciation accompanied by phases of volatility" and stated that "RBI is keeping a close watch on movements of the Rupee and will take appropriate steps, as warranted".
Current rupee performance
According to the MPC Report of October 2025, the Indian currency depreciated by 3.5 per cent against the US dollar (as on September 26, 2025) vs March-end 2025.
Despite the depreciation, the Rupee remained among the least volatile emerging market currencies during this period.
The currency was further hit by escalation in US-India trade tensions, widening trade deficit, and FPI outflows, noted the MPC.
Yet, strong macroeconomic fundamentals, including a narrower current account deficit, steady services exports, resilient private remittances, and robust foreign exchange reserves, supported the Rupee throughout, according to the report.
Measures for internationalising the Rupee
The RBI announced three specific measures to promote the international use of the Rupee, which could indirectly strengthen its global standing.
Enhanced regional trade financing: Permit Authorised Dealer (AD) banks to lend in Indian Rupees to non-residents from Bhutan, Nepal, and Sri Lanka for cross-border trade transactions.
Transparent reference rates: Establish transparent reference rates for currencies of India's major trading partners to facilitate Rupee-based transactions.
Expanded investment options: Permit wider use of Special Rupee Vostro Account (SRVA) balances by making them eligible for investment in corporate bonds and commercial papers.
According to the apex bank chief, India's foreign exchange reserves stood at $700.2 billion as of September 26, 2025. These forex reserves are sufficient to cover more than 11 months of merchandise imports, he noted. Forex plays a big part in supporting the Rupee against the American greenback.
