RBI Governor Says Indian Rupee May Be Undervalued

Reserve Bank of India Governor Sanjay Malhotra stated on Wednesday that financial markets can be irrational in the short term and that the Indian rupee may be undervalued. Speaking at a post-policy press conference, Malhotra addressed concerns regarding currency polls and hedging behaviors that indicate a depreciation bias, even as India continues to attract foreign capital flows.

Malhotra noted that several measures, including the real effective exchange rate (REER), suggest the currency is not overvalued. He argued that it is only in the long run that markets are able to find the right value for the currency.