The Indian Rupee remains under pressure as USD/INR approaches the 92.00 level. The upcoming FY2026/27 Budget announcement is crucial for assessing fiscal consolidation amidst rising capital outflows. Markets expect the government to target a debt-to-GDP ratio of around 54-55% for FY2026/27, which may influence market sentiment, notes Michael Wan, Senior Currency Analyst at MUFG Bank.
Focus on fiscal consolidation trajectory
« Moving forward, India will have two key important events in the upcoming week – the Budget and RBI’s monetary policy decision. »
« Markets will watch closely for whether the central government in India commits to a credible fiscal consolidation path, and this is coming in the broader context of rising debt borrowing requirements from state governments with increasing cash transfer programs at the state level. »
« The expectation for markets is that India will likely target government debt to GDP at around 54-55% for FY2026/27 from 56% of GDP currently. »
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)