RBI's Ex-Governor Subbarao Says Rupee Correction Against Fundamentals Futile

Economic Times · stocks

Former Reserve Bank of India governor D Subbarao stated that attempting to artificially correct the rupee's value through costly, short-term measures that ignore economic fundamentals is ultimately futile. He advised the RBI to manage the rupee's trajectory rather than fix it at a specific level, as it will naturally revert to its fundamental value. Subbarao noted that durable capital inflows based on fundamentals, not borrowed resources, are needed for strengthening the rupee. He also pointed to structural issues like capital outflows and regulatory unpredictability as deeper causes for depreciation.