ET Graphics: BoP stability tested by outflows & Rupee fall

India’s exterior account is coming underneath strain with each present and capital accounts going through stress. Present account deficit is predicted to widen, whereas capital account may even see excessive outflows. So as to add to the woes, the rupee has depreciated round 11% over the previous 12 months and practically 5% for the reason that US-Iran battle started.

Anoushka Sawhney takes a glance:

If further strain on Rupee emerges, the RBI might think about vary of measures, together with reopening a forex swap window for OMCs, providing incentives for FCNR(B) deposits and additional liberalising capital inflows, mentioned Rajani Sinha, Chief Economist, CareEdge Rankings.

Additionally learn: Exports diversification drive provides $202 million to kitty in FY26

Coverage motion outdoors standard fee hikes might be tapped to anchor the forex, together with elimination of withholding tax for international buyers in sovereign bonds, international forex bond issuances by PSBs on hedged foundation, and deposit scheme to attract in non-resident inflows, mentioned Radhika Rao, ED, DBS BANK.

Stay Occasions

“Greater than the widening present account deficit, it’s the shrinking capital account surplus weighing on BoP. We anticipate policymakers to, amongst different measures, create conducive situations for state-owned lenders to boost international forex bonds,” mentioned Aastha Gudwani India, Chief Economist, Barclays.

ET Bureau