Reserve Bank of India Governor Sanjay Malhotra said the Indian rupee may now be undervalued following its recent depreciation, in an interview with Mint. The comment signals official recognition that the currency has fallen beyond fair value levels, potentially setting the stage for intervention or policy adjustments. Malhotra's assessment comes amid ongoing pressure on emerging market currencies.

The rupee has faced sustained downward pressure in recent months, driven by global risk aversion and dollar strength. When a central bank governor acknowledges undervaluation, it often reflects concern about export competitiveness and imported inflation. Such comments can influence market expectations and trading strategies among institutional investors monitoring Asian currency movements.

This assessment carries weight given the RBI's role in managing monetary policy and foreign exchange interventions. Currency undervaluation can boost export competitiveness while raising import costs, creating a delicate balance for policymakers. The statement suggests the central bank may be preparing markets for potential actions to support the rupee's value against the dollar.

For businesses and investors, the governor's comment indicates that current rupee levels may not reflect underlying economic fundamentals. Companies with dollar-denominated debt face higher repayment costs, while exporters benefit from improved competitiveness in global markets.