Rupee has scope to stabilise, appreciate: RBI deputy governor Poonam Gupta

Mumbai: Reserve Bank of India deputy governor Poonam Gupta suggested the rupee's recent depreciation could be temporary, with potential for stabilization and appreciation. The currency has fallen 13.1% since March 2025, despite India's economy expected to expand 7-8% in real terms. Gupta, speaking at an SBI event, did not provide a timeline for the appreciation.

She believes the rupee may stabilize and even gain value, as market analysts had anticipated when capital flow measures were introduced. The rupee recently closed at 95.74, after reaching a record low of 96.96 in late May. Gupta noted India's balance of payments deficit is expected to improve, with a small current account deficit of less than 1% of GDP, driven by services exports and remittances.

However, higher oil and gold prices have temporarily widened the deficit, while the capital account surplus has lagged. Gupta anticipates these issues will ease later this fiscal year, aided by increased foreign direct investment and improved corporate and bank balance sheets. She attributes the disconnect between India's strong real economy and underperforming financial markets to short-term return considerations, which could be temporary.

As global shocks subside and India's economic prospects become more competitive, the economy's strength may become more evident in financial markets.