The Governor of the Reserve Bank of India, in a recent interview, stated that the central bank will employ "all necessary measures" to ensure the orderly functioning of the foreign exchange market.

Since the outbreak of conflict on February 28, the Indian rupee has depreciated significantly by approximately 6% and currently appears undervalued.

The RBI Governor clarified that the central bank does not have a specific exchange rate target but emphasized its readiness to intervene if speculative pressures intensify.

He added that the RBI will take all required steps to ensure the smooth operation of price discovery mechanisms in the forex market.

The Reserve Bank of India possesses ample policy tools, including nearly $7,000 billion in foreign exchange reserves, sufficient to calm any unreasonable speculative fluctuations.

Given the recent depreciation of the rupee, some analysts believe it is undervalued both in terms of nominal exchange rates and real effective exchange rates.

Once the geopolitical situation stabilizes, the rupee may appreciate.

Measures are needed to reduce the current account deficit, a matter the government has been addressing. Improvement is also required in the capital account.

The primary mandate of the Reserve Bank of India is to control inflation. "If changes in inflation trends provide policy space, we will support economic growth."