Analysis / BoP stress episodes

Balance-of-payments stress: then and now Original

When the rupee is under pressure, who pays for India's external gap: the current account, foreign capital, banks, or RBI's reserves? This page adds up RBI's balance-of-payments data over the current episode and three earlier ones (2013, 2018, 2022), item by item, and lets you build your own. Data to Q1 FY27 (Apr 2026 – Jun 2026); it updates when RBI publishes the next quarter.

Based on Vedant Agarwal, Nirupama Kulkarni and Gautham Udupa (CAFRAL), "Forex Interventions and Balance of Payments", June 2026, which compares these four episodes. This page rebuilds its analysis from RBI's public data and recomputes it with each release; the numbers shown are our own computation.

Components of BoP flows in stress episodes

US$ billion, totals over each episode; + = net inflow. Show the average per quarter instead (episodes differ in length)

Table after Agarwal, Kulkarni and Udupa (CAFRAL, 2026), Table 3; data: RBI's BPM6 presentation. Capital and financial accounts = capital account plus the financial account excluding reserve assets (the capital account is under $1 billion in every episode). FDI into India is item 3.1.A; ODI is direct investment abroad by Indian residents (item 3.1.B), negative when residents invest abroad; together they are net direct investment. Reserves drawn down = BoP reserve assets, which exclude valuation changes. Rupee fall = change in the quarterly average rupee-dollar rate from the quarter before the episode to its last quarter. In each episode, current account + capital and financial accounts − reserves drawn down + errors and omissions = 0. Episodes are runs of quarters in which the rupee weakened while RBI was a net seller of dollars (how they are chosen).

What sets the current episode apart

• The current account is not the main driver. Its deficit over 7 quarters was $29.3bn, within the range of earlier episodes (2022: $101.2bn), even though the episode is longer.
• Capital has reversed. In the earlier episodes the capital and financial accounts brought in net $16–73 billion, paying for 59–72% of the current-account deficit. This time they recorded net outflows of $31.9bn.
• Banks have been a net drain. Banking capital (in RBI's older BPM5 presentation, the only one that separates it) brought in $11.5–27.3 billion in earlier episodes, 37–73% of net capital inflows. This time it was −$9.6bn, about 30% of the net capital outflow: non-resident deposits brought in $23.2bn, but banks added $32.2bn to their foreign assets.
• Reserves made up the difference. RBI's reserves were drawn down by $60.6bn, 2.0 times the 2022 drawdown. About 52% of it paid for capital outflows rather than the current-account deficit.
• Remittances shield the current account. The goods and services deficit ($189.3bn) and net primary income payments ($89.2bn) were 89% covered by secondary income, mostly remittances ($249.1bn).
• Two outflows, one partial offset. Net payments on financial derivatives ($46.9bn) exceeded net portfolio outflows ($44.7bn). Net direct investment was only $10.3bn, because investment abroad by Indian residents ($61.6bn) offset most of FDI into India ($72.0bn). Other investment (loans, deposits, trade credit) brought in $49.8bn.

The current episode is treated as open: when RBI publishes the next quarter, it is added if the rupee weakened again and RBI was again a net seller of dollars.

Includes a brief pause in Apr-Jun 2025, when the rupee strengthened.

Who financed the gap

After Agarwal, Kulkarni and Udupa (CAFRAL, 2026), Table 2. Totals over each episode; + = net inflow. Bank capital is banking capital in RBI's BPM5 presentation (commercial banks' foreign assets and liabilities, including non-resident deposits), a part of the capital and financial accounts. A fall in reserves is shown as + (it finances the other lines).

Build your own episode

Pick any run of quarters to add up the same items. BPM6 detail starts in Apr 2013; banking capital and RBI's dollar sales go back to 2000.

Derivative-related outflows

Net payments on financial derivatives were $46.9bn over the current episode, against $7.4bn in 2022. Gross payments to non-residents rose from $6.3bn in Q4 FY23 to $19.4bn in Q1 FY27, while receipts rose from $3.7bn to $9.4bn. Banking capital shows no comparable trend.

Which derivative flows land in this line

Under the IMF's sixth Balance of Payments Manual (BPM6), only some of the money that moves on a derivative contract between a resident and a non-resident is recorded as "financial derivatives". A rising net outflow in this line therefore points to option premiums, non-repayable margins or final settlements, not to repayable margins or brokers' fees.

Table after Agarwal, Kulkarni and Udupa (CAFRAL, 2026), Table 4. Source: IMF, Balance of Payments and International Investment Position Manual, sixth edition (BPM6), chapters on financial derivatives and margins. RBI reports derivative flows as one line, so the published data cannot say which of these flows has grown.

Latest quarters

US$ billion unless stated; + = net inflow, and + for reserves = a fall. RBI net dollar sales = sales minus purchases in the OTC market over the quarter's three months (spot and forward deliveries; RBI Bulletin Table 4); these differ from the BoP change in reserves, which also reflects interest earned, government transactions and timing. Rupee change: quarterly average rate on the previous quarter; + = a weaker rupee. "Weaker rupee and net sales?" is the rule used to extend an open episode. RBI's dollar dealing is published to Aug 2026.

How this is built