India RBI chief says markets can be irrational as rupee returns near record lows - Reuters

The Indian rupee has moved back toward its record low against the US dollar, prompting Reserve Bank of India Governor Sanjay Malhotra to observe that markets "can be irrational" at times, according to Reuters. The remark captures a familiar tension in currency markets: price moves are not always anchored to fundamentals in the short run, and central banks must weigh when volatility reflects information versus sentiment.

For observers, the key question is how the RBI responds. The central bank does not target a specific rupee level, but it does intervene to curb excessive volatility, so traders watch for signs of dollar supply from the RBI and any shift in the pace of depreciation. Moves in the rupee also feed into imported inflation, particularly for energy, and can influence foreign portfolio flows into Indian assets.

What to watch next: the RBI's intervention signals, global dollar trends, and oil prices. These factors will shape whether the rupee stabilizes near current levels or tests new lows.