Reserve Bank of India Governor Sanjay Malhotra said he expects reasonable and healthy foreign dollar inflows into Indian equity and government-bond markets.
These inflows are intended to strengthen India's balance of payments and support broader economic growth by attracting foreign capital. This strategy comes as the central bank navigates global economic volatility and seeks to stabilize the domestic financial environment.
Speaking during the Monetary Policy Committee meeting in Mumbai this Friday, Malhotra said he is "hopeful of reasonable & healthy dollar inflows, not targeting any particular number" [1]. While the governor did not set a specific numerical target for these inflows, the focus remains on improving the overall balance of payments [1], [2].
Regarding the current monetary stance, the RBI kept the repo rate unchanged at 5.25% [3]. This decision reflects a balancing act between controlling inflation and fostering growth. Malhotra said that CPI inflation remains below the target despite global shocks, noting that the pass-through to domestic prices has been limited [2]. However, he said that baseline projections suggest headline inflation may firm up toward the upper tolerance level [2].
The central bank's financial position has seen significant growth. The RBI balance sheet expanded 20.6% year-on-year to ₹91.97 lakh crore in FY 2025-26 [4]. This expansion provides the bank with substantial resources to manage liquidity and market stability.
Despite the effort to attract foreign capital, the governor emphasized the need for market discipline. Malhotra said the bank will do whatever it takes to curb undue speculation in the foreign exchange market [5]. This indicates a dual approach of welcoming long-term investment while aggressively preventing short-term volatility that could destabilize the rupee.
“"Hopeful of reasonable & healthy dollar inflows, not targeting any particular number."”
The RBI is attempting a delicate balancing act by inviting foreign capital to bolster reserves and growth while simultaneously signaling a zero-tolerance policy for currency speculation. By keeping the repo rate steady and focusing on 'healthy' rather than 'targeted' inflows, the bank is prioritizing stability and sustainable balance-of-payments improvement over aggressive, volatile growth.
