India's rupee has climbed to more than seven-month highs, but the country's central bank governor isn't yet worried about the rise or whether it will affect exports.
"I am not worried about overvaluation at this point," Raghuram Rajan, governor of the Reserve Bank of India (RBI), told CNBC. "A certain amount of leeway this way, that way is fine," he said.
"We obviously don't want to reach a level where we think we'll have renewed volatility because that's too strong," he said. "We would take precautionary measures to reduce volatility at that point. I think you have to be somewhat agnostic over the range."
On Wednesday, the U.S. dollar was fetching as little as 59.81 rupees, as the Indian currency reached its strongest level since July of last year. The rupee's strength is particularly striking after it plunged 24 percent from the start of May to the end of August last year, touching record lows of near 70 to the dollar amid concerns about the U.S. Federal Reserve's plan to begin tapering its asset purchases as well as India's economic fundamentals.
A combination of factors has fueled the currency's appreciation – including an improvement in economic fundamentals such as the current account, together with Rajan's proactive approach to monetary policy. While India's merchandise exports posted their first decline in eight months in February, Rajan said he isn't concerned the rupee strength is damping demand for the country's goods overseas.