India’s CAD narrows as BoP surplus jumps
pre-market5 sources ↓machine-written, see hownot a recommendation
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India’s current account deficit narrowed to $5.2 billion in August 2026 from $6.1 billion a year earlier, supported by a smaller merchandise trade gap and a stronger services surplus, according to Reserve Bank of India data reported on 15 Oct 2026. The country’s overall balance of payments swung to a $45.4 billion surplus from a $5.6 billion deficit in August 2025, improving from a $20.8 billion surplus in July. 🌐
The merchandise trade deficit declined to $26.6 billion from $27.6 billion, while higher services earnings helped contain the external gap. The capital account recorded a $50.6 billion surplus against $0.5 billion a year earlier. Banking capital inflows reached $64.7 billion, compared with an outflow of $4.7 billion in the same month last year, while net non-resident Indian deposits rose to $83 billion from $1 billion. These inflows strengthened the external financing position, although a $22.4 billion net outflow under external commercial borrowings capped the capital-account gain. 💵
The near-term market implication is a stronger external-balance backdrop for India’s financial system and currency liquidity. However, the improvement was driven heavily by capital inflows, so the durability of the trend depends on whether deposit mobilisation and other foreign inflows persist alongside the trade and services balance. For the first five months of the financial year, the current account deficit widened to $18.3 billion from $12.8 billion, showing that the August improvement does not yet represent a full-year trend.
Market performance was positive on the same session. OI Charts data showed the banking index at ₹55,810, up 0.9%, with a five-session gain of 2.4%. The benchmark index closed at ₹22,997, up 1.7%, and gained 3.4% over five sessions. The next markers for traders are subsequent RBI external-sector releases, monthly merchandise-trade data and evidence on whether NRI deposits and wider capital inflows remain elevated.
Source: The Times of India, 15 Oct 2026
Not investment advice. For informational purposes only.