Don’t Defend Rupee at 100, Says Economist Amid Currency Crisis
Brief By Newsbrief / 1:27 PM on 23 May 2026
As the Indian rupee continues to weaken against the US dollar, concerns are growing that it could soon cross the psychological 100-per-dollar mark. Amid this debate, Finance Commission Chairman Arvind Panagariya has urged the Reserve Bank of India not to make defending the 100 level a policy priority. According to him, “100 is just a number, like 99 or 101,” and the central bank should avoid unnecessary intervention to artificially support the currency.
Panagariya argued that allowing the rupee to depreciate is the most practical response to the ongoing global oil crisis. He explained that whether the oil shortage turns out to be temporary or prolonged, currency depreciation would help the economy adjust naturally. If the disruption lasts only for the short term — between three months and a year — the rupee may remain weak initially, but it could later recover as oil import costs stabilize and foreign investors take advantage of cheaper Indian assets.
However, he warned that if the oil crisis continues for a longer period, attempts to defend the rupee through foreign exchange reserves or expensive dollar-linked financial instruments would eventually fail. According to him, using reserves to support the currency would only drain them over time without solving the underlying problem.
The economist also dismissed issuing dollar bonds and offering high-interest NRI deposits as temporary and costly measures that mainly benefit wealthy overseas Indians. He compared the current situation with India’s 2013 currency crisis but noted that the country is now in a stronger position because inflation is no longer in double digits.
His remarks came after the rupee hit a record low of 96.95 against the dollar and closed at 96.86 on Wednesday. On Thursday, the currency recovered by 49 paise to settle at 96.37, supported by softer crude oil prices and expectations of central bank intervention.