Govt could consider easing export restrictions to support rupee: Report

Bengaluru: With the rupee depreciating to a record low level against the US dollar, the government could also consider easing some of the export restrictions imposed earlier this year, said QuantEco Research in a note.The government imposed a 15% export duty on a range of finished steel products to check elevated prices. It also prohibited the export of wheat in May to check domestic availability. “Given the recent depreciation in Rupee, the government could also consider easing some of the administrative restrictions Imposed on exports earlier this year…,” the note by QuantEco Research said.Rupee closed at 81.8 against the US dollar on Thursday after plunging below the 82-mark for the first time during intra-day on Wednesday.India’s current account deficit widened by less than expected to $ 23.9 billion (2.8% of GDP) in Q1 FY23 from $13.4 bn (1.5% of GDP) in Q4 FY22.The note added that some relief can be expected in subsequent trade deficit prints, on account of factors including a lagged impact of correction in global commodity prices by close to 18% since June peak came through. It also expects moderation in global supply chain bottlenecks, with the New York Federal Reserve’s Global Supply Chain Pressure Index down to an 18-month low as of Aug-22. It added that the rising global growth risks can further impinge upon commodity prices going forward.“Nevertheless, these factors when juxtaposed with ongoing strength in domestic recovery, pent-up demand for both goods and services and … high run rate of trade deficit, we continue to hold our FY23 CAD estimate of $130 bn, while attaching the possibility of a mild downside risk,” added the note.