India's current-account deficit stood at $18.1 billion, or 3.6% of gross
domestic product, in the first three months of the year, data from the
Reserve Bank of India showed Thursday. The country's current-account
deficit narrowed sharply between January and March following the record
gap in the previous three months. It stood at $32.6 billion, or 6.7% of
gross domestic product, in the October-December quarter. For the
financial year that ended March 31, the deficit stood at $87.8 billion,
or 4.8% of GDP. It widened from $78.2 billion, or 4.2% of GDP a year
earlier, the RBI said.
The data was released earlier than
expected--it was originally due Friday evening. Currency market dealers
say the RBI may have released the data ahead of schedule to support the
rupee, which sank to a new low Wednesday.
The Indian rupee has
weakened more than 11% since May as global investors have rushed into
dollar-denominated assets on expectations that the U.S. Federal Reserve
will soon roll back a massive stimulus program that has injected
billions of dollars into the global financial system. On Wednesday, the
rupee touched its all-time low of 60.73 per dollar due to defence and
crude oil related demands. The Reserve Bank of India (RBI) intervened to
check rupee's further slide at 59.90/USD. The central bank was actually
trying to resist it from breaching the Rs 60/$ level. Meanwhile, the
finance minister P Chidambaram on Tuesday said that there was no need to
react and panic over the rupee's fall. India has been struggling with a
weak external sector, with foreign investment proving insufficient to
bridge the wide current-account gap quarter after quarter, highlighting
the fragile state of Asia's third-largest economy.
Source by Commodity Insights
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