What did RBI Governor Sanjay Malhotra say about the rupee's current valuation, and why is this statement notable?

RBI Governor Sanjay Malhotra stated that '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,' adding that the RBI does not target any specific exchange-rate level but will take all necessary measures to curb speculative movements. This remark is notable because it is unusual for an RBI governor to publicly comment on the rupee’s valuation or signal potential undervaluation, especially just ahead of a key monetary policy decision on June 5.

What factors have contributed to the rupee's recent rebound, and what is its year-to-date performance?

The rupee rebounded due to increased central bank intervention, easing oil prices following US-Iran peace talks, and expectations of a rate hike at the upcoming monetary policy meeting — leading to a 1.5% three-day gain, including a 0.3% stronger opening at 95.40 per dollar on Monday. Despite this recovery, the rupee is still down about 6% so far this year, pressured largely by equity outflows exceeding $23 billion — surpassing last year’s record.

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