Key Points
The rise in exports post-pandemic has given India's current account the necessary buffer, particularly since the outbreak of the Russia-Ukraine war in 2022, notes a report by Barclays Capital..
Despite the steep surge in commodities such as crude oil, natural gas, vegetable oil, and fertilisers on which India is heavily import dependent, the current account deficit (CAD)was at a manageable 2% in FY23...
"Reduced current account financing and improved capital flows have added to the economy's macro stability, a far cry from its categorisation as one of the 'Fragile Five' economies a decade ago," said Rahul Bajoria, head of EM Asia (ex-China) economics research at Barclays Investment Bank...
The Reserve Bank of India is also equipped with over $600 billion of reserves to defend the rupee compared to $292 billion in 2012-13, adding to the market perception that the central bank is extra vigilant...
"In our view, the RBI is keeping liquidity conditions tight to protect the economy and the currency from undue volatility given the financial risks brewing globally," wrote Neelkanth Mishra, chief economist at Axis Bank in his outlook for 2024...
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