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The Reserve Bank of India (RBI) should not fto the “psychology of ₹100 per dollar” forestall it from letting the speech complaint autumn beyond that limit, president of the Sixteenth Finance Commission Arvind Panagariya said connected Thursday (May 21, 2026).
“Dear @RBI: Do not fto the science of Rs 100 per dollar find your argumentation response. 100 is conscionable a number, similar 99 and 101. Whether the lipid shortage is short-lived oregon long-lived, the close effect astatine this infinitesimal is to fto the rupee depreciate,” Mr. Panagariya posted connected the societal media level X.
This comes astatine a clip erstwhile the rupee astir touched ₹97 to a dollar successful the intraday commercialized connected Thursday (May 21, 2026), with traders saying the RBI intervened to forestall it from crossing that limit.
Mr. Panagariya argued that, successful the lawsuit of the lipid shortage being short-lived, the rupee volition depreciate present but volition “substantially recover” erstwhile the lipid import measure shrinks and overseas superior seeks Indian investments precisely to instrumentality vantage of the cheaper rupee.
If the lipid shortage lasts longer than a year, helium said that resorting to “anything different than depreciation volition beryllium a losing proposition”, adding that trying to support the rupee volition “continue to bleed the reserves until they are exhausted”.
“Nor would the dollar-denominated bonds oregon high-interest dollar-denominated NRI deposits crook retired to beryllium much than a band-aid,” Mr. Panagariya added, presumably referring to quality reports that the RBI was considering these options to support the rupee. “Eventually, you volition person to transverse the 100-rupee-per-dollar intelligence barrier.”
He added that dollar-denominated bonds and high-interest NRI dollar deposits are “costly instruments that wage importantly higher interest” than the complaint India earns connected its ain foreign-currency reserves.
“It is mostly a transportation to affluent NRIs,” Mr. Panagariya said.
“This is not 2013: Inflation was successful the treble digits successful 2013. Thanks to your [the RBI’s] prudent monetary management, that is not the lawsuit now. Therefore, the system is well-positioned to sorb immoderate inflationary unit that volition travel the depreciation,” helium said.
