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

Mumbai: The rupee's depreciation over the past year and a half could prove temporary, with the currency having a fair chance of stabilising and eventually appreciating, Reserve Bank of India deputy governor Poonam Gupta said.

She said the rupee was not fully reflecting the strength of India's underlying economy. The currency has depreciated 13.1% between March 31, 2025 and September 16, 2026, even as the economy is positioned to grow 7-8% in real terms. Gupta was speaking at a State Bank of India event in Mumbai and did not give a timeline for a possible appreciation.

"One may think of the cumulative depreciation of the INR in the past year and a half to be a temporary phenomenon," she said. "If anything, there seems to be a fair case for the rupee to not just stabilise but perhaps even appreciate from the current levels, as was being anticipated by the market analysts when the capital flow measures were first announced."


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The rupee closed at 95.74 on Wednesday. It touched a record low of 96.96 in late May, after which measures by the RBI and government to attract inflows helped stabilise the currency.

Gupta also said the RBI has sufficient resources to ensure orderly conditions in the foreign exchange market.

Her assessment rests partly on an expected improvement in India's balance of payments, with a small current account deficit (CAD) of less than 1% of GDP, which is managed through services exports and remittances. However, higher oil and gold prices have temporarily widened the CAD, while the capital account surplus fell short of the deficit in recent years, resulting in a balance of payments deficit of $5 billion in 2024-25 and $23.6 billion in 2025-26.

Gupta expects these pressures to ease and the capital account to become more favourable later this financial year, helped by rising foreign direct investment, healthy corporate and bank balance sheets, and recent efforts to attract foreign capital.

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Gupta also pointed to a disconnect between the strength of the real economy and parts of the financial markets. India grew 7.8% in FY26 and is estimated to have maintained the same pace in the first quarter of FY27, but equity markets have not reflected the same optimism, partly because investors have found more attractive AI-led opportunities in other economies. This has drawn capital and market attention away from India.

"At one level, there seems to be a bit of disconnect between some parts of the financial markets and the underlying near- and medium-term promise of the real economy," she said.

Gupta attributed the disconnect largely to short-term return considerations in global financial markets. She said this could be temporary. As global shocks ease and relative valuations become more competitive, the strength of India's economy could start to be reflected more fully in financial markets.