New Delhi: Economist and former Vice-Chairman of NITI Aayog Arvind Panagariya has said there is no need for panic if the Indian rupee weakens to the Rs 100 per US dollar level, arguing that the currency should be allowed to adjust naturally in response to global conditions.
Speaking to NDTV Profit, Panagariya stated that the Reserve Bank of India (RBI) should avoid excessive intervention in the foreign exchange market in an attempt to defend what he described as a psychological threshold.
He said, "Don't panic at Rs 100 per dollar," adding that the exchange rate performs an important function in absorbing external shocks during phases of global uncertainty and geopolitical stress. According to him, such flexibility is essential for maintaining macroeconomic stability when global conditions are volatile.
RBI intervention and currency adjustment debate
Panagariya highlighted that aggressive efforts to defend the rupee could eventually lead to depletion of India's foreign exchange reserves. He argued that allowing the currency to move in line with market forces would be a more sustainable approach over the long term.
He further noted that whether the ongoing global crisis turns out to be temporary or prolonged, a gradual depreciation in the rupee would enable the economy to adjust more efficiently to external pressures.
His comments add to the ongoing debate on India's exchange rate policy, particularly at a time when global financial markets remain sensitive to geopolitical tensions, inflation trends, and shifting interest rate cycles.
Fuel prices and crude oil pass-through
Extending his remarks on macroeconomic policy, the economist said that higher international crude oil prices should eventually be reflected in domestic fuel prices rather than being artificially suppressed.
"The government is not there to guarantee a fixed price of any product," he said, highlighting the importance of price signals in a market-driven economy.
His statement touches on one of India's recurring policy challenges, balancing inflation control with fiscal prudence and market realism in energy pricing.
Caution on high-interest NRI deposit schemes
Panagariya also expressed caution regarding policy proposals aimed at attracting foreign currency inflows through high-interest Non-Resident Indian (NRI) deposit schemes.
He warned that while such measures may bring short-term inflows, they could create significant long-term costs for the economy, particularly if they distort financial stability or interest rate structures.
Views on foreign exchange spending and policy restrictions
On policy measures linked to foreign exchange demand, he supported Prime Minister Narendra Modi's appeal encouraging citizens to reduce discretionary foreign currency spending.
However, he cautioned against imposing mandatory restrictions on such spending, stating that compulsory controls could prove counterproductive and may not deliver the intended economic benefits.
Earlier social media remarks on Rs 100 psychological level
Panagariya had earlier reiterated on social media that policymakers should not allow the Rs 100 per US dollar mark to become a psychological anchor influencing monetary policy decisions.
He argued that currency adjustments driven by market forces are more sustainable, especially during periods of heightened global volatility, and should not be resisted merely to defend symbolic levels.
Agency inputs