India Faces BoP Deficit as Capital Flows Weaken: DBS
DBS economist Radhika Rao warns that India's balance of payments has swung into deficit, driven by softer capital flows, weaker foreign portfolio inflows, and narrower net FDI. She notes that the RBI and government are stepping in to support capital flows.
A DBS economist has flagged growing stress in India's external accounts. Radhika Rao detailed the country's capital account challenges, pointing to weakening capital flows, softer foreign portfolio inflows and a narrower net Foreign Direct Investment (FDI) figure. These factors have pushed India's balance of payments (BoP) into deficit.
The report notes that the Reserve Bank of India (RBI) and the government are actively supporting capital flows to counter the pressure. The observation comes amid broader concerns over emerging-market capital movements as global monetary conditions remain tight.
Rao's assessment highlights a deterioration in the composition of capital inflows, with the deficit underscoring the need for sustained policy support. The economist stopped short of providing specific projections but signaled that the authorities remain vigilant.
Source: FXStreet Forex News