New Delhi: With the Rupee continuing to depreciate to an all-time low to Rs.95 a dollar, Finance Commission Chairman Arvind Panagariya has said that maintaining the Rupee under the ‘psychological barrier’ of Rs.100 to a dollar remains futile.
In a series of tweets, the economist explained that any issue of dollar-denominated bonds or high-interest dollar-denominated NRI deposits would be nothing but a band-aid for the country. “Eventually, you will have to cross the 100-rupee-per-dollar psychological barrier,” he explained.
Dear @RBI: Do not let the psychology of Rs 100 per dollar determine your policy response. 100 is just a number, like 99 and 101. Whether the oil shortage is short-lived or long-lived, the right response at this moment is to let the rupee depreciate. 1/6
— Arvind Panagariya (@APanagariya) May 21, 2026
Urging the Reserve Bank of India (RBI) to abandon its defence as specific exchange rate milestones, Arvind has warned that treating the triple-digit number as a panic button will not work.” Trying to defend the rupee will continue to bleed the reserves until they are exhausted”, he warned. Instead, he has urged the RBI to let the Rupee adjust naturally, saying that the Rupee would recover back to below 100 depending on the geopolitical situation.
Nor would the dollar-denominated bonds or high-interest dollar-denominated NRI deposits turn out to be more than a band-aid. Eventually, you will have to cross the 100-rupee-per-dollar psychological barrier. 4/6
— Arvind Panagariya (@APanagariya) May 21, 2026
Besides, a depreciated rupee would be a blessing in disguise to attract foreign capital, which has been flowing away from the country for quite some time now.
By allowing the currency to realign to market forces, India’s service and manufacturing exports would become stronger on the global stage. This would help protect the state’s hard currency reserves in the long term.
