DBS Group Research economist Radhika Rao has analyzed early post-conflict data for India, highlighting that wholesale inflation has strengthened while the Consumer Price Index (CPI) has seen a modest increase [1]. Rao notes that the Wholesale Price Index (WPI) is particularly sensitive to commodity and imported cost pressures and is expected to rise further due to base effects and external factors [1]. She emphasizes that the price impact is likely to be more pronounced than growth in the near-term, depending on the duration of ongoing geopolitical tensions [1].
Regarding India's external accounts, Rao states that for FY26, a wider trade deficit is being offset by resilience in service exports, which is expected to keep the full-year current account deficit close to a modest -0.6% to -0.7% of GDP [1]. In the bond market, yields are described as range-bound, with expectations to hover within the 6.8-7.0% range, provided there are no fresh signs of escalation in Middle East tensions [1].
On the foreign exchange front, the Reserve Bank of India (RBI) has implemented administrative measures to slow the rupee's one-way depreciation. As a result, the USD/INR exchange rate held above 93.00 mid-week, having come down from near the record 95.0 level seen in March [1]. Rao also mentions that abundant banking liquidity is present in the system, which, along with RBI's actions, has implications for portfolio flows [1].
CONCLUSION
India is experiencing rising wholesale inflation and modestly higher retail prices, with the RBI taking steps to stabilize the rupee amid geopolitical uncertainties. Bond yields remain stable, and the current account deficit is expected to stay modest due to strong service exports. Market participants are closely watching for further geopolitical developments that could impact these trends.