Daijiworld Media Network - Mumbai

Mumbai, May 25: Sanjay Malhotra has said the Indian rupee is not overvalued and may, in fact, be undervalued following its recent depreciation amid global uncertainties and the ongoing conflict in West Asia.

In an interview with Mint, the Reserve Bank of India Governor said the rupee’s current valuation does not indicate any excessive strength even as the currency nears the psychologically significant 100-per-dollar mark.

“With the recent depreciation, it would be reasonable to think that rupee is not overvalued. If anything, one could argue that rupee has become undervalued, both in nominal as well as in REER (real effective exchange rate) terms,” Malhotra said.

He reiterated that the RBI does not target any specific exchange rate level and clarified that the central bank would intervene in the currency market only to prevent excessive volatility or speculative activity.

The RBI Governor also sought to ease concerns over India’s external financial position despite rising crude oil prices linked to tensions in West Asia.

He said the country’s balance of payments situation was “not an undue concern yet”, indicating confidence in India’s external sector stability despite global headwinds.