In thefirst part of this interview, G. Mahalingam outlined the real drivers of the rupee’s depreciation, arguing that it is less about domestic weakness and more about delayed adjustments to global dollar strength. He explained how the RBI’s past reluctance to let the rupee adjust naturally created pent-up pressure, now unwinding rapidly. While a gradual depreciation wouldn’t be a major concern, a sharp fall to 90–92 a dollar within weeks could create severe disruptions for importers and external borrowers who haven’t hedged their exposures.Mahalingam dissected the RBI’s intervention strategy, highlighting how the 90-per-dollar level became a critical psychological barrier. He explained why the central bank stepped in aggressively before it was breached, fearing that unchecked depreciation would trigger a self-fulfilling speculative attack. He also detailed how traders watch for patterns in RBI behaviour, taking advantage of predictable intervention points.
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