Skip to main content

Capital outflows no major macro concern

Net portfolio outflows from Indian financial markets have picked up over recent weeks as the growing prospects of war between Ukraine and Russia and tighter global monetary policy have caused risk appetite to sour. Outflows from the equity market have been particularly severe and have reached levels not seen since the start of the pandemic, chiming with the 6% drop in the Sensex from its peak in January. Outflows could yet intensify if those twin threats continue to build. If outflows do pick up, they wouldn’t put macro stability at immediate risk given India’s large stockpile of FX reserves and small current account deficit. But if oil prices continue to surge and India’s terms of trade worsen, that will add to pressure on the RBI to take firmer policy tightening steps over the coming months.

Become a client to read more

This is premium content that requires an active Capital Economics subscription to view.

Already have an account?

You may already have access to this premium content as part of a paid subscription.

Sign in to read the content in full or get details of how you can access it

Register for free

Sign up for a free account to gain:

  • Unlock additional content
  • Register for Capital Economics events
  • Receive email updates and economist-curated newsletters
  • Request a free trial of our services

Get access