Q3 CAD narrows to $10.5 bn. on rise in services exports
India’s foreign exchange reserves increased by $32.9 billion during AprilDecember 2023, on a balance of payments basis excluding valuation effects, as against a depletion of $14.7 billion during the yearearlier period, Reserve Bank of India (RBI) data showed.
Foreign exchange reserves in nominal terms, including valuation effects, increased by $44 billion during AprilDecember 2023, as against a decrease of $44.6 billion in the same period of the preceding year. The valuation gain, reflecting the depreciation of the U.S. dollar against major currencies, lower bond yields and higher price of gold, amounted to $11.1 billion during AprilDecember 2023 as against a valuation loss of $29.9 billion a year earlier.
India’s current account balance recorded a deficit of $10.5 billion (1.2% of GDP) in Q3 FY24, narrower than $16.8 billion (2% of GDP) a year earlier and $11.4 billion (1.3% of GDP) in Q2 FY24, as per data released by the Reserve Bank of India (RBI) on Tuesday.
The current account deficit as a proportion of GDP for Q2 FY24 underwent an upward revision to 1.3% from 1% earlier due to an upward adjustment of customs data on merchandise imports, the RBI said.
The merchandise trade deficit at $71.6 billion was marginally wider than $71.3 billion during Q3 FY23. Services exports grew by 5.2% on a yearonyear (YoY) basis on the back of rising exports of software, business and travel services, data showed.
“Net services receipts increased both sequentially and from a year ago that helped cushion the current account deficit,” the RBI said.
Net outgo on the primary income account, primarily reflecting payments of investment income, increased to $13.2 billion from $12.7 billion a year earlier. Private transfer receipts, mainly representing remittances by Indians employed overseas, amounted to $31.4 billion, up 2.1% over the same period a year earlier.
In the financial account, foreign direct investment recorded a net inflow of $4.2 billion as compared with a net inflow of $2.0 billion in Q3 FY23.
The valuation gain amounted to $11.1 billion during April-December 2023, RBI data showed