Domestic currency falls 1.8% in 2025 on new RBI governor’s flexible stance on rupee, UBI reports
New Delhi| Policy changes made by RBI in the management of the Indian currency have weakened the rupee against the dollar. The rupee has fallen by more than half in the first two months of 2025 against the dollar compared to the depreciation in 2024. As of 28 February, the rupee has fallen by 1.8 per cent against the US dollar. The decline is higher than the 1.5 percent decline it had previously experienced in 2023 and is nearly half the three percent weakness recorded in 2024. Union Bank of India has said this in one of its reports.
Rupee falls due to RBI Governor Sanjay Malhotra’s stance: Report
According to the report, RBI Governor Sanjay Malhotra’s change in stance has been attributed to the fall in the rupee. The report said the central bank, led by Malhotra, has left the option open for a more flexible rupee. RBI is allowing the rupee to move freely. While former RBI Governor Das had supported keeping the rupee very stable against the US dollar, this is also putting pressure on the rupee.
US trade policy increased uncertainty in the market
The escalation of trade war risks and uncertainty surrounding US trade policies have given rise to market concerns. The rupee, along with other Asian currencies, has come under pressure due to investor concerns about global trade disruptions. Apart from this, the report also said that policy changes by the Reserve Bank of India (RBI) have also affected the rupee.
New RBI Governor Sanjay Malhotra’s stance on rupee more flexible
New RBI Governor Sanjay Malhotra has adopted a more flexible stance, saying the central bank will allow the rupee to move freely with other emerging market currencies. This is different from the stance of former RBI Governor Shaktikanta Das, who preferred a stable rupee against the US dollar. Since taking office, US President Donald Trump has made several trade tariff announcements. His first move was to impose a 25 per cent duty on goods coming from Canada and Mexico, which was implemented with a delay of 30 days, but the rupee still crossed the 87.00 level on 3 February.
