The Indian government is preparing further policy steps to protect the economy from the West Asia conflict. These measures will ensure sufficient availability of goods and raw materials. The focus is on stabilizing the Indian currency and foreign exchange flows. Additional measures will be announced as needed. The government is closely monitoring trade deficits and
Government and RBI measures to boost foreign investment in government securities led to a bond rally, with benchmark 10-year G-Sec yields softening. Exemptions from long-term capital gains and withholding taxes for FPIs in G-Secs, along with expanded investment options, are seen as positive for the fixed income market.
Leading mutual fund houses, including HDFC, ICICI Prudential, and Nippon India, are temporarily restricting large lump-sum investments in gold ETFs and fund of funds. This move aligns with the government’s policy to discourage gold purchases, following an increase in import duty. The restrictions primarily target large investors, with exceptions for authorized participants and market makers,
The RBI maintained the repo rate at 5.25% amidst economic slowdown fears and rising inflation risks from the West Asia conflict. Governor Sanjay Malhotra signaled concern over generalized inflation, cutting the FY27 growth forecast to 6.6% and raising inflation projections to 5.1%.
Foreign investors are increasingly favoring India’s debt market, with FPI debt inflows comprising a significant portion of overall foreign capital. This trend is boosted by global bond index inclusion and easier access routes. With attractive real yields and a stable currency outlook, India is poised for more debt investments, crucial for managing the current account
The government has extended the tenure of Reserve Bank Deputy Governor Swaminathan Janakiraman for another two years, effective June 26, 2026. Janakiraman, who was initially appointed in June 2023, will continue in his role as the central bank maintains its four-deputy governor structure.
The rupee surged 56 paise to 95.18 against the US dollar following RBI’s measures to attract foreign capital and boost forex liquidity. These policy announcements, including expanding the Fully Accessible Route and removing taxes on foreign investment in G-Secs, improved investor sentiment. Analysts expect further appreciation if oil prices remain below $100 a barrel.
