Reserve Bank of India said on Wednesday that it was "rather comfortable" with the rupee appreciating against the US dollar.
"Looking at what is happening in the international market and the kind of currency alignments taking place globally, we feel that the movement of exchange rate is adequate," RBI deputy governor Rakesh Mohan told reporters in Bangalore.
The rupee closed on Tuesday at a two-year high of Rs 46.90 against the dollar with the forward premiums crashing to an all-time low of 0.35 per cent for six months and 0.38 per cent for the one-year forward.
"In view of the currency alignments, we feel that the Indian market and the currency market is responding quite adequately," Mohan said.
He said the RBI was interested in maintaining orderly conditions and stability in the market.
Asked whether RBI was mopping up dollars to increase its value, Mohan said, "We will continue to act so that there is no instability."
He said the RBI had not set any target for the exchange rate and maintained that its role would be to ensure stability in the market.