RBI Chief Calls Dollar Shorts 'Very Manageable'

Reserve Bank of India (RBI) Governor Sanjay Malhotra has defended the central bank's large bearish dollar position built over the past two years to support the rupee, calling the net-short forward-dollar position “very manageable.” His remarks came as the Indian rupee steadied near 95.68 per dollar on August 20, 2026, after recent gains.

The rupee's stability has been cushioned by ongoing RBI intervention and a broadly weaker US dollar, which offset pressure from rising crude prices and persistent importer hedging demand, according to TradingEconomics. Malhotra's comments were highlighted by BNY Mellon's Geoff Yu and reported by FXStreet.

Market-determined Exchange Rate

Malhotra said the exchange rate remains market-determined, while RBI intervention is still aimed at curbing excessive volatility and speculative activity. He stressed a market-determined exchange rate and data-driven intervention calibration as guiding principles for the central bank's approach.

Defending the FCNR(B) Swap Window Closure

The governor defended the early closure of the FCNR(B) swap window as a data-driven calibration, not a policy reversal. He argued that each additional swapped dollar offers diminishing benefits, while sterilization costs rise.

Stronger-Than-Expected Inflows

Malhotra said inflows into India have been stronger than expected. The RBI expects at least $80 billion from recent measures to attract foreign currency, including FCNR(B) deposits, external commercial borrowings, and overseas foreign-currency borrowings.

The rupee's position reflects a period of active central bank management, with traders expecting the RBI to continue intervening to limit intraday volatility and keep the currency in a narrow range. For market participants, the governor's reassurances signal that the central bank sees its current dollar exposure as sustainable even as the cost of maintaining it rises.