India’s balance of payments is projected to show a surplus of nearly $50 billion in FY27. This comes as the current account deficit is expected to remain contained at about 1% of GDP. The Reserve Bank of India has already mobilised more than $57 billion through its special FCNR deposit scheme and another $25–30 billion may flow in, taking the total close to $85 billion.
Experts say this strong inflow will add to India’s foreign exchange reserves. However, the rupee may not automatically strengthen. If banks swap these deposits with the RBI, the central bank may hold them as reserves and invest in assets like United States Treasuries or gold. This increases reserves but does not release dollars into the domestic market.
Madan Sabnavis, Chief Economist at Bank of Baroda, explained that while reserves rise, the rupee’s value may not appreciate because the supply of dollars in the market remains unchanged. The only way the rupee could gain is if the RBI decides to unwind forward positions and release dollars into circulation.
India’s external position looks stronger with rising reserves and a projected surplus. Yet the rupee’s path depends entirely on the RBI’s strategy. Appreciation will occur only if inflows are injected into the market rather than locked away.