The Indian Rupee tumbled by over 1% on Monday after data showed that India’s trade deficit widened to $10.56 billion in October reversing the two-and-half year low recorded in the previous month.
The cause for the widening trade gap came as demand for imported gold and oil climbed ahead of the Indian festival season. The data disappointed some economists but was far better than the previous year and is likely to narrow in the coming months as exports improve. Other analysts said that the data came within expectations.
“I would say that the data is good. Exports have risen for the fourth month, while the rise in gold imports is expected due to the seasonality. The trade deficit will be controlled and $68-$70 billion deficit for the whole year may be feasible,” said the chief economist at Bank of Baroda.
Crude oil imports in October rose to $15.0 billion from $13.2 billion in September. Gold and silver imports increased to $1.37 billion in October from $800 million a month earlier.
At a press conference held after the data was released the Indian Commerce secretary S.R Rao painted an optimistic view for the future after he said that demand from the USA, India’s largest export market, was strong and demand from the Eurozone was also improving steadily.
The Rupee is likely to remain under pressure in the coming weeks as speculation over whether the US Federal Reserve will choose to taper its monetary easing programme sooner than expected increases in the wake of a spate of positive US data releases.
“The Rupee has begun weakening again and that will slow the pace of foreign inflows,” said Surya Narayan Nayak, an analyst at Networth Stock Broking Ltd.
Current Rupee (INR) Exchange Rates:
The Pound Sterling/ Indian Rupee Exchange Rate is currently in the region of: 101.3923
The Euro/Indian Rupee Exchange Rate is currently in the region of: 84.7138
The US Dollar/Indian Rupee Exchange Rate is currently in the region of: 63.2950
The Australian Dollar/Indian Rupee Exchange Rate is currently in the region of: 59.3276
The New Zealand Dollar/Indian Rupee Exchange Rate is currently in the region of: 52.2572
The Canadian Dollar/Indian Rupee Exchange Rate is currently in the region of: 60.4410
(Correct as of 10:15 am GMT)
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