Hindustan Times (Jalandhar)


- Mint Cor­re­spon­dent feed­back@livemint.com

MUM­BAI: The In­dian ru­pee on Tues­day weak­ened 0.9%, its steep­est fall in eight months, against the US dol­lar af­ter the coun­try’s trade deficit widened to a three-year high on higher oil and gold im­ports.

The home cur­rency ended at 64.04 a dol­lar, down 0.86%, its big­gest fall since May 18, 2017, from its Mon­day’s close of 63.49. The ru­pee opened at 63.63 a dol­lar and touched a low of 64.11, a level last seen on De­cem­ber 28, 2017.

Trade deficit widened to $14.88 bil­lion in De­cem­ber as com­pared with $10.50 bil­lion from a year ago, gov­ern­ment data showed on Mon­day. Mer­chan­dise im­ports surged nearly 21.1% last month year-on-year to $41.90 bil­lion. Mean­while, ex­ports grew 12.4% year-on-year to $27.03 bil­lion.

“Over­all, these num­bers sug­gest that while ex­ports ben­e­fit from a stronger global up­trend and fad­ing do­mes­tic con­straints, a larger com­mod­ity bill (mainly oil) could de­te­ri­o­rate the trade bal­ance anew. De­cem­ber’s num­bers also rekin­dle con­cerns over the cur­rent ac­count bal­ance this year,” said Rad­hika Rao, econ­o­mist at DBS Bank Ltd.

“The trail­ing cur­rent ac­count deficit bal­ance has now widened to -2.5% of GDP for the De­cem­ber quar­ter, wors­en­ing from -1.2% in July-Septem­ber. This suggests that the full-year cur­rent ac­count deficit might be worse than our fore­cast of -1.8% of GDP vs -0.7% in FY17 and av­er­age be­tween 2-2.2%”, the re­port added.

Bond yield rose over 11 ba­sis points to hit a near three-week high af­ter Re­serve Bank of In­dia deputy gover­nor Vi­ral Acharya said it can’t re­peat­edly man­age the in­ter­est rate risks of lenders, as banks suf­fer from a bond mar­ket rout into its sixth month.

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