New Delhi, Nov 20 (PTI) Reserve Bank Governor Sanjay Malhotra on Thursday said the central bank does not target any level for the rupee, and the recent depreciation of the domestic currency against the US dollar is primarily due to trade uncertainties following the imposition of tariffs by the Trump administration.

The governor also exuded confidence that India will secure a favourable trade deal with the US, which will help ease the pressure on the current account.

"We do not target any level. Why is the rupee depreciating? (It) is because of the demand. It is for the markets to decide...It is a financial instrument, and there is a demand for dollars, and if the demand for dollars goes up, the rupee depreciates; and if the demand for the rupee goes up, the dollar comes down, then it appreciates," he said while interacting with the students after delivering VKRV Rao Memorial Lecture at the Delhi School of Economics here.

Elaborating further, Malhotra said the recent depreciation in the rupee against the US dollar is due to the trade side effect after the imposition of a steep 50 per cent US tariffs on Indian exports.

He said exports and FIIs impacted the current account as well as the capital account.

"...but we are quite confident that there will be a good trade deal (with the US). Hopefully, that should relieve whatever pressure has been there on our current account," he said, adding that the RBI has very good foreign exchange buffers and hence, there is no need for concern.

In his speech, the governor spoke on various aspects of regulations and emphasised that the foremost priority of the Reserve Bank is financial stability.

"So, you're all aware that while markets are very, very powerful engines of growth and efficiency, and as far as possible, we should leave the markets to decide and determine the course of action for all of us, for all the economic agents.

"We leave it to the markets, but we are all, at the same time, also aware that there are market failures, and that is where regulation comes in...so, for us in the Reserve Bank, for all central bankers, in fact, financial stability remains the Northstar," he said.

Observing that the RBI is always vigilant and alert to emerging risks, Malhotra said the central bank encourages innovation while being mindful of its regulatory objective of safeguarding systemic stability.

"We are trying to simplify regulations wherever possible while maintaining the necessary safeguards and guardrails. We are strengthening coordination with all other regulators while at the same time respecting the jurisdictional boundaries," he said.

He further said the RBI is trying to enforce rules consistently while recognising that there can be circumstances which will warrant flexibility. PTI DP NKD CS NKD BAL BAL

Rupee moves driven by market dollar demand; RBI says no target and prioritises financial stability amid trade-driven pressure. RBI does not target any rupee level and treats the exchange rate as market-determined; recent depreciation reflects increased dollar demand from trade disruptions and tariffs, affecting the current and capital accounts. The Bank stresses ample foreign exchange buffers and prioritises financial stability, advocating market-based determination while reserving regulatory intervention for market failures, simplifying regulations with safeguards, enforcing rules consistently but allowing flexibility, and strengthening interregulatory coordination.