RBI measures lift FY27 BoP outlook to over $50 bn surplus, CAD seen at 1%: SBI Research

New Delhi: India's balance of payments (BoP) outlook for FY27 is projected to show a surplus of approximately $50 billion, with the current account deficit (CAD) expected to stay at 1% of GDP, thanks to robust foreign currency inflows, according to SBI Research. The Reserve Bank of India's special FCNR(B) deposit mobilisation scheme has already attracted $57 billion in inflows, with an additional $25-30 billion anticipated in the remaining days of August, bringing total collections to around $85 billion.

SBI Research asserts that the early termination of the FCNR(B) window is unlikely to significantly affect external liquidity, estimating total inflows through FCNR(B), overseas foreign currency borrowings (OFCBs), and external commercial borrowings (ECBs) could reach $80-85 billion. Despite concerns over the swap facility's cost, SBI Research estimates the five-year cumulative hedging cost at $10.5 billion, which is only 1.45% of India's current foreign exchange reserves of $700 billion and 1.27% of projected reserves over five years.

The rupee's appreciation has been limited to around 0.1% following the FCNR(B) measures, with the bank projecting it to strengthen to the Rs 95-95.5 range per US dollar by the end of August, though actual gains may vary from those in 2013. The report also highlights global risks, such as 30-year US Treasury yields nearing 5.3% and potential Brent crude prices approaching $100 per barrel if challenges around the Strait of Hormuz persist.

SBI Research advises the RBI to continue diversifying its reserve portfolio, noting that gold's share of India's foreign exchange reserves hit a record 16.7% in FY26 before slightly decreasing to 15.38% as of August 7, emphasizing the significance of building a more resilient portfolio.