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Informist, Wednesday, Sept. 23, 2026

 

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--RBI Gupta: We are doing exceptionally well as an economy 
--CONTEXT: RBI Deputy Governor Poonam Gupta speaking at SBI Conclave 
--RBI Gupta: India one of the most challenged emerging economies 
--RBI Gupta: Global AI exuberance a vulnerability for India 
--RBI Gupta: Policymakers need to communicate clearly, provide certainty 
--RBI Gupta: Fincl mkts appear somewhat disconnected from India econ growth 
--RBI Gupta:Our equity mkt not rapidly growing due to AI boom in other econs 
--RBI Gupta: CAD will continue to shrink going forward 
--RBI Gupta: Sharp rupee depreciation in last 1.5 yrs a temporary phenomenon 
--RBI Gupta: Fair case for rupee to appreciate from here on 
--RBI Gupta: Expect inflation to remain within our tolerance band this year 
--RBI Gupta: India has a very calm bond market
 

 

MUMBAI – The Reserve Bank of India Deputy Governor Poonam Gupta Wednesday said there is a fair case for the rupee to appreciate from here on. Addressing the 13th SBI Banking and Economics Conclave here, Gupta said the sharp depreciation in the rupee during the last one-and-a-half year is a temporary phenomenon.

 

"The rupee has cumulatively depreciated by 13.1% (on a point-to-point basis) from March 31, 2025 to September 16, 2026... One may think of the cumulative depreciation of the INR (or shall one say its overcorrection) in the past year and a half to be a temporary phenomenon," Gupta said. "There seems to be a fair case for the rupee to not just stabilise but perhaps even appreciate from the current levels," she said. 

 

Gupta also expects that the country's inflation will remain within the RBI's tolerance band of 2-6% in 2026-27 (Apr-Mar). "Credibility of monetary policy, declining structural pressures on inflation have contributed as well," she said. She added that the Economist remarked that, "India's experience shows the importance of cleaning up public finances and letting central bankers fight inflation in peace."

 

At the August Monetary Policy Committee meeting, the Reserve Bank of India cut the outlook for FY27 headline inflation by 10 basis points to 5.0%. The central bank also cut the inflation forecast for Jul-Sept by 40 bps to 4.7%. Latest data showed CPI inflation in August rose to a 20-month high of 4.82% from 4.45% in July. CPI inflation was 2.01% in August last year.

 

However, Gupta said financial markets appear disconnected from India's economic growth and added that the equity markets have not tracked the "same optimism". "This is plausibly because of a relatively more promising AI-led story in certain other economies. While the Indian equity market witnessed an exceptional run of its own, roughly from June 2022 to September 2024, some other economies are having a better run now," Gupta said.

 

The central bank official said it is only a matter of time before Indian equities look relatively more attractive again. She added that the country has a very calm bond market. "Among the markets, the bond market has performed well, both compared to its own past as well as in comparison to most other countries," Gupta said.

 

The current global artificial intelligence exuberance is a vulnerability for India, Gupta said. She said the country is doing exceptionally well as an economy but is one of the most challenged emerging economies. 

 

The economy has emerged from the ongoing global shocks and has anchored inflation with the country's growth being the highest among its peers, Gupta said. "This brings us to how policymakers have handled the aforementioned shockwaves," she said. "Policy makers need to communicate clearly, provide policy certainty, and stay committed to the long-term goals of prosperity and stability." 

 

She expects the country's current account deficit will continue to shrink going forward. "Furthermore, the CAD levels have remained far below the levels generally considered to be prudent for emerging market economies. Net services exports and remittances remain its great structural strengths. Together, they are large and resilient enough to absorb the merchandise trade deficit and keep the CAD contained at below 1% of GDP," she said.  End

 

Reported by J. Navya Sruthi and Kabir Sharma

Edited by Deepshikha Bhardwaj

 

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