Comments
Citibank economists expect trade deficit for the current fiscal (FY14) to be contained at $156 billion ($194 billion in FY13), thus resulting in the current account deficit (CAD) coming in at $42 billion or 2.3 per cent of GDP.
In a note to clients, they said that while the likely reduction in CAD has been driven by a compression of gold/non-essential imports, they expect the trend to persist as the resumption of iron ore exports and potentially lower coal/metal scrap imports should partially offset a pick up in gold and/or capital goods.
India’s trade deficit numbers came in at $10 billion in December in keeping with the average for the past five months. For the April-December period, exports rose 6 per cent to $230 billion while imports were down 6.6 per cent to $340 billion, leaving a trade deficit of $110 billion ($147 billion in the comparable period last year).
Rupee outlook On the outlook for the currency, Citi’s economists are of the view that “a continued up-tick in US treasury yields could put some pressure on high-yielding currencies such as the rupee.”
They believe that the narrowing of CAD to below 3 per cent of GDP and high forex reserves would provide structural strength to the rupee against emerging market volatility. They maintain their view that USD/INR is likely to trade in the 60-63 range in the next few months.
vageesh.ns@thehindu.co.in
Comments
COMMENT NOW
Comments
Comments have to be in English, and in full sentences. They cannot be abusive or personal. Please abide by our community guidelines for posting your comments.
We have migrated to a new commenting platform. If you are already a registered user of TheHindu Businessline and logged in, you may continue to engage with our articles. If you do not have an account please register and login to post comments. Users can access their older comments by logging into their accounts on Vuukle.