New Delhi, Feb. 7 -- The rupee seems to be on a relatively unrestrained slide. It dropped to a new low of 87.58 against the dollar on Thursday. It has already weakened about 2% this year, extending its 3% decline in 2024. This need not be bad, though.

We should let the rupee find its true market value, with intervention only to prevent jerky drops. If the rupee is held artificially high, it gets exposed to speculative attacks, even though capital controls can shield it to an extent. A fairly valued rupee would also enable Indian exporters to stay competitive.

Under a new governor, the Reserve Bank of India (RBI) may have reduced dollar sales in rupee support, but only data released later can confirm this. The trade-off here relates to i...