BackCurrent account deficit widens in risk to rupee
The July-September deficit is equivalent to 1.6% of GDP, according to the RBI, compared with 2.2% a year earlier
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New Delhi: India’s current account deficit widened more than estimated, threatening to push the rupee even lower after an increase in US interest rates.
The shortfall in the broadest measure of trade was $8.2 billion in July to September, widening from $6.1 billion in the previous quarter, the Reserve Bank of India said in a statement on Tuesday. The median of 13 estimates in a Bloomberg survey of economists had predicted a $7.8 billion gap.
Exports have fallen for 12 straight months, dragging the rupee toward its record low against the dollar. Global funds have been net sellers of Indian stocks and bonds this month as the Federal Reserve increased borrowing costs for the first time since 2006.
“The widening deficit is something you’re going to have to live with for the next two quarters," said Madan Sabnavis, chief economist at Credit Analysis & Research Ltd in Mumbai. However it’s narrowed from the previous year, indicating “there isn’t a real big problem here," he said.
The July-September deficit is equivalent to 1.6% of GDP, according to the RBI, compared with 2.2% a year earlier. The central bank had forecast in August that the gap would stay below 1.5% of gross domestic product in the year through March 2016. Holding it at sustainable levels hinges on an export turnaround, the central bank had said.
The one-month non-deliverable rupee forwards were little changed at 66.57 a dollar in the offshore market as of 12pm in London. The currency also ended largely unchanged in the local market, which was shut before the data. It has weakened more than 1% this quarter in one of Asia’s worst performances. Bloomberg
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