The Reserve Bank of India’s recent efforts to attract foreign currency have strengthened the country’s external position, with projections of a significant balance-of-payments surplus and record-breaking forex reserves amid global uncertainties.
The Reserve Bank of India’s drive to pull in foreign currency has given the country a stronger buffer against external shocks, with a Bank of Baroda report projecting a balance-of-payments surplus of $65 billion to $75 billion in fiscal 2027.
The report said the current account deficit is likely to remain around 1% to 1.25% of gross domestic product, helped by firmer services exports and remittances. It added that the central bank’s measures have already mobilised $136.4 billion, supporting the rupee and easing pressure on India’s external accounts.
India’s foreign exchange reserves have also climbed to a record $729.3 billion, according to recent reports citing Reserve Bank data. The increase was helped by inflows through a special swap window for non-resident deposits, along with gains in foreign currency assets and gold holdings.
The inflows have been concentrated in foreign currency non-resident bank deposits, with banks lifting rates on three- to five-year tenures to make them more appealing to overseas Indians. The broader package of measures was introduced as higher oil prices, persistent foreign portfolio outflows and geopolitical tensions revived fears about the so-called twin deficit problem, but Bank of Baroda said India now appears better insulated than it was earlier in the year.
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