The Indian rupee is flirting with an all-time low of 97 against the US dollar, having weakened nearly 2% in July alone.
The RBI’s internal tug-of-war
RBI Governor Sanjay Malhotra set expectations back in May 2026 when he publicly committed to taking “necessary action” to maintain orderly foreign exchange markets. Reports from July 21 indicate that RBI interventions have been limited and sporadic. The gap between what the market expected and what it got has left traders surprised and recalibrating their positioning. Short positions on the rupee have climbed in early July, following an eight-month low in June 2026.
An internal divide has surfaced within the RBI itself. Malhotra and Deputy Governor Poonam Gupta reportedly favor a more market-driven approach, letting the rupee find its natural level rather than burning through reserves to prop it up. Others within the institution evidently disagree on how much intervention is appropriate.
Why the rupee is sliding
