Former NITI Aayog Vice-Chairman Arvind Panagariya said the RBI should allow the rupee to adjust naturally
May 22, 2026: Arvind Panagariya has advised the Reserve Bank of India not to let the rupee approaching Rs 100 against the US dollar dictate monetary policy decisions. In a post on X, Panagariya said the “psychology” surrounding the Rs 100 mark should not influence policy responses, adding that the number is no different from Rs 99 or Rs 101. The Indian rupee has weakened significantly in 2026 and remains the worst-performing currency in Asia so far this year.
Panagariya argued that allowing the rupee to depreciate naturally is the most practical response to the ongoing oil supply pressures. He said if the oil shortage proves temporary, the currency would eventually recover once import costs ease. However, if the shortage continues for a longer period, attempting to artificially defend the rupee would only drain India’s foreign exchange reserves. He also rejected suggestions such as launching dollar-denominated bonds or high-interest NRI deposit schemes, calling them expensive short-term measures that would eventually fail to stop the rupee from crossing the Rs 100 mark.
The economist further noted that India’s current economic situation is far stronger than during the 2013 currency crisis triggered by the US Federal Reserve’s taper tantrum. He pointed out that inflation is currently under control and below the RBI’s target level, giving the economy more capacity to absorb inflationary pressure caused by currency depreciation. However, concerns remain over rising fuel prices after recent crude oil spikes linked to tensions in West Asia.