Overview
- The Reserve Bank of India reported in its July 22 bulletin that foreign portfolio and direct investment flows have recovered recently, which it interprets as a revival of investor confidence in India.
- The central bank said domestic demand, supported by firm industrial and services activity and improved liquidity, sustained growth through June and underpinned robust bank credit expansion.
- RBI data show active currency intervention in recent months, including a net sale of $6.1 billion in May and a record net outstanding forward dollar position of about $106.66 billion at end‑May.
- External accounts remain comfortable with reserves covering more than ten months of goods imports and supporting trade that saw exports rise about 16% and imports 18% in April–June 2026–27, widening the trade deficit.
- The bulletin flagged two key near‑term risks: an uneven southwest monsoon that could pressure food inflation despite high public foodgrain stocks, and geopolitical shocks to crude oil that have pushed up fuel costs.