The country’s June trade deficit widens to a record high of $25.63 billion from $9.61 billion a year ago
The country’s June trade deficit widens to a record high of $25.63 billion from $9.61 billion a year ago
Indian rupee at record low against US dollar On Tuesday, after concerns emerged of a wider current account deficit (CAD) after the country’s trade deficit hit an all-time high in June.
Data late Monday showed India’s June trade deficit hit a record high of $25.63 billion from $9.61 billion a year ago after increased imports of crude oil and coal.
Analysts and economists expect the country’s current account deficit to be around 3.2% of GDP in FY2023, as compared to 1.2% in 2022.
The partially convertible rupee was trading at 79.37/38 per dollar, hitting a low of 79.3750. On Monday it was trading at 78.95.
“We expect India’s current account deficit to continue to rise, with limited offset from India’s FDI and foreign investment inflows into India’s current account deficit,” said Nomura economist Sonal Verma.
“Therefore, we expect USD/INR to reach 82 by Q3 2022 and 81 by Q4 2022. A risk in our view is USD selling intervention by RBI, which may slow down the pace of INR depreciation.”
domestic stock market The trade ended negative, closing down 0.2%, putting pressure on the rupee.
Foreign portfolio outflows from equities stood at $6.6 billion in the month of June, the highest since March 2020, taking the total outflows in 2022 so far to over $30 billion.
Traders said the central bank sold the dollar sporadically and helped contain a sharp fall in the local unit, but expectations of an aggressive rate hike by the US Federal Reserve and the resultant widening interest rate differential maintained weak bias in the rupee. are supposed to.
Goldman Sachs said in a recent note that in view of the change in the brokerage’s balance of payments forecast, they have revised their 3, 6 and 12-month forecasts on USD/INR to 80, 81 and 81, as against earlier It was 79, 79 and 78.