Rupee has a fair case to appreciate: RBI DG Poonam Gupta

Poonam Gupta, deputy governor, Reserve Bank of India.(@airnewsalerts/x)AI Quick ReadThere is a strong case for the rupee to stabilize and potentially appreciate from current levels as its depreciation over the past year and a half is likely to prove temporary, given India’s underlying balance-of-payments (BoP) strength, Reserve Bank of India deputy governor Poonam Gupta said.

“If anything, there seems to be a fair case for the rupee to not just stabilize but perhaps even appreciate from the current levels, as was being anticipated by the market analysts when the capital flow measures were first announced,” she said.

Between 31 March and 16 September, the rupee has depreciated by a little over 13%. In FY26, the currency had weakened by 11%. In order to bolster the rupee and bring foreign inflows into India, the central bank on 5 June announced several measures, including the facility that allowed banks to raise fresh three- and five-year foreign currency non-resident bank or FCNR(B) deposits from non-resident Indians and swap the dollars with RBI at a concessional rate that effectively offset the hedging cost.

The broader swap package also covered overseas foreign-currency borrowings (OFCBs) and external commercial borrowings (ECBs). On Monday, the central bank said inflows through these schemes topped $143.5 billion as of 18 September, with FCNR(B) deposits accounting for the bulk at nearly $133 billion.

India garnered $5.3 billion each from ECBs and OFCBs. Gupta said India’s BoP had turned negative over the past two fiscal years, with a deficit of about $5 billion in FY25 and $23.6 billion in FY26 as the capital-account surplus fell short of the CAD.

However, she said the CAD should shrink in the coming years, helped by growing merchandise exports, declining dependence on imported oil, new trade opportunities and the impact of recent free trade agreements. The capital account, meanwhile, is expected to become more favourable, potentially from later this fiscal year.

This is on the back of strong domestic macroeconomic fundamentals, high real and nominal GDP growth, a gathering domestic investment cycle, healthy bank and corporate balance sheets, rising foreign direct investments and the eventual inclusion of Indian bonds in more global indices.

On growth, Gupta said India had emerged from a succession of global shocks largely unscathed and “perhaps even stronger structurally”. India's gross domestic product growth was 7.8% in FY26 and was estimated at 7.8% in the first quarter of FY27.

She said the economy was operating in a resilient 7%+ growth equilibrium and was steadily working towards an 8%+ equilibrium. Inflation, too, has remained anchored, while fiscal consolidation and a resilient financial sector have strengthened the economy’s ability to absorb shocks, she said.

Gupta highlighted oil and commodity shocks, geopolitical conflicts, trade and tariff disruptions, El Niño and rapid technological change as major sources of uncertainty. On artificial intelligence, she said India had so far not benefited in the same way as some other economies, with global AI exuberance instead becoming “somewhat of a vulnerability” through capital outflows.

But she described AI as an “unspent force” for India, saying the country would leverage its potential while avoiding the associated risks. Subhana Shaikh is a business journalist at Mint, where she covers the Reserve Bank of India, monetary policy, and India’s bond markets.

She has seven years of experience in reporting on financial markets, with a focus on banking and the broader financial system. She began her career after completing her postgraduate diploma at the Indian Institute of Journalism and New Media, Bengaluru.

She then spent five years at Informist Media, a news wire agency, where she closely tracked bond markets and the BFSI sector, developing a strong foundation in market reporting. She later moved to NDTV Profit, where she expanded her coverage across a wide range of business and economic stories.

At Mint, Subhana focuses on explaining central bank decisions, bond market movements, and banking trends for her readers. Her reporting combines on-ground inputs with careful analysis to help audiences understand complex financial developments.

Based in Mumbai, she is interested in exploring stories across the business landscape. Outside of work, she enjoys reading and spending time with her three cats. Catch all the Business News , Economy news , Breaking News Events andLatest News Updates on Live Mint.

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