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Expressing confidence about India striking a “good trade deal” with the US, Reserve Bank of India (RBI) Governor Sanjay Malhotra on Thursday said an agreement, once struck, would reduce pressure on India’s current account and the rupee’s exchange rate.
“The recent depreciation that you have seen is because on the trade side there are some tariff, additional penal tariffs,” Malhotra said. “Exports did come down in the month of October – that’s the current account. Similarly, on the capital account, you are seeing that the flows this time around…(are) somewhat muted.”
“But we are quite confident that there will be a good trade deal, hopefully, going forward. And that should relieve whatever pressure has been there on our current account. We have very good buffers of foreign exchange, $690 billion, and so that’s not a matter of concern,” the central bank chief said.
As per latest data from the RBI, India’s foreign exchange reserves stood at $687 billion as on November 7, down $15 billion since mid-October. Meanwhile, in recent days, the Indian rupee has been near its record low of 88.81 per dollar that was hit in September. On Thursday, the rupee closed at 88.71 per dollar. The RBI is said to be intervening in the foreign exchange market by selling dollars to support the rupee.
The US’ imposition of 50 per cent tariffs on India, including a penal tariff of 25 per cent for the purchase of Russian oil and energy, in late August has taken a toll on India’s merchandise exports. Earlier this week, commerce ministry data showed India’s trade deficit rose to an all-time high of $41.68 billion as exports declined 12 per cent from last year while imports were up 17 per cent.
India’s current account deficit widened to $2.35 billion in April-June 2025 from a surplus of $13.48 billion in the previous quarter. Net foreign direct investment (FDI) into India, meanwhile, in the first five months of 2025-26 stood at $10.13 billion, more than double from that a year ago. However, net FDI in all of 2024-25 was a mere $959 million.
Malhotra also reiterated the RBI’s stance on cryptocurrencies and stablecoins, saying they were a “huge risk” and warranted the RBI to be “very cautious”.
“Stablecoins, cryptos, they have a huge risk and so we are adopting a very cautious approach towards it,” Malhotra said. “But at the same time, when it comes to digital innovations like UPI or digital lending, our stance has been very accommodative and very enabling.”
The RBI Governor’s latest comments back those he made in the US last month when he urged other central banks to use and promote Central Bank Digital Currencies (CBDCs) instead of stablecoins to facilitate international payments. The RBI is currently conducting pilot projects of two types of CBDCs – retail and wholesale.
Earlier in October, Finance Minister Nirmala Sitharaman had noted at the Kautilya Economic Conclave that innovations such as stablecoins were transforming the landscape of money and capital flows and forcing countries to choose between adapting to new monetary architectures or risk being excluded. The Finance Minister’s comments came at a time when stablecoins – which are essentially private cryptocurrencies linked to an actual asset, usually the US dollar – are seeing increasing acceptance among policymakers around the world.
At present, Tether and USDC are the top two stablecoins globally. Both are pegged to the US dollar and make up more than 80 per cent of the $300 billion-plus global stablecoin market. India does not currently regulate virtual digital assets such as cryptocurrencies and stablecoins, with Malhotra saying on Thursday the government has to take a final decision on the matter.
“The government has to take a final view. There is a working group that was set up earlier, and they will take a final call as to how, if at all, crypto is to be handled in our country,” Malhotra said in response to a question.
