India Faces Persistent External Account Pressures Despite Forex Inflows
· Business · Economic Times
India's balance of payments remains under pressure despite a significant surge in foreign currency inflows through the Reserve Bank of India's special swap window. Chief Economic Advisor V Anantha Nageswaran stated at the State Bank of India Banking and Economics Conclave in Mumbai that rising imports and global interest rates continue to strain the external account. Inflows through the facility, which covers foreign currency deposits and commercial borrowings, exceeded $143.5 billion as of September 18. These inflows are expected to help India record a balance of payments surplus of approximately $100 billion this financial year, compared to a $23 billion deficit in the previous year. Nageswaran cautioned that the swap programme should not be considered a permanent solution to long-term external account challenges.
Why it matters
The persistent pressure on the external account affects the stability of the Indian rupee and the country's ability to manage its import costs amid volatile global interest rates. Businesses reliant on foreign capital and imports face ongoing uncertainty regarding currency fluctuations and liquidity availability.
Read the original report — Economic Times
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