The rupee on 16 August had slumped to a life-time low of 70.32 on strong demand for the US dollar.
Yesterday it staged a good recovery to end higher by 20 paise at 69.91 against the US currency on bouts of dollar selling by exporters and corporates.
"Well just to be fair, the Indian authorities have brought down the fiscal deficit. What has expanded is the current account deficit. A lot of it driven by higher oil prices," he said.
"The rupee has not depreciated to too worrying levels, its sort dollar strength around the world," Rajan told a TV channel.
Rajan, who was RBI governor for three years till September 2016, said further that this is a time where countries should be focusing on getting the macro stability in order.
"Going into election year, countries like India and Brazil should try their level best to look as good as possible," he said.
On the controversy over back series GDP data which showed that the growth was better during UPA regime, Rajan said: "What we have to do right now is to look forward its growing at about 7.5 per cent."
India, he added, has to make sure that CAD does not grow out and fiscal stability is maintained. Replying to a query on rising bad loans, Rajan said there is a need to improve governance in the banks.
Recently, a top Finance Ministry official said the government will meet the fiscal deficit target for the current fiscal but is also expecting some slippage in the CAD on higher crude oil prices.