|
|
|
CAD may shoot up to over 1% in FY22
|
|
|
|
Top Stories |
|
|
|
|
SME Times News Bureau | 03 Sep, 2021
With a pick up in economic activity and the consequent rise in imports,
India is expected to quickly turn from a position of current account
surplus in FY21 to that of current account deficit (CAD) in FY22.
As
per an assessment by Kotak Institutional Equities (KIE), the country's
current account deficit to GDP is likely at 1.1 per cent in FY22 with
rupee remaining strong against dollar and remaining in the Rs 72.5-74
range in near term.
The Covid-19 pandemic and nationwide lockdown
last year has impacted the economic activity in the country with GDP
plummeting by over 24 per cent in April-June quarter of FY21.
For
the full year FY21, the current account balance recorded a surplus of
0.9 per cent of GDP as against a deficit of 0.9 per cent in FY20 on the
back of a sharp contraction in the trade deficit to $102.2 billion from
$157.5 billion in FY20. This was the first time that the country has
recorded an annual current account surplus in 17 years. But this surplus
was largely on account of a slowdown in imports due to shrinking
economic activity.
We expect the overall external sector to
remain comfortable but will be subjected to risks from a widening trade
deficit, high commodity prices, and policy normalisation in the US, and
spread of Covid cases, KIE said in its report.
The rupee has been
appreciating significantly recently aided by broad based dollar
weakness after a soft rhetoric by the Fed Chair followed by weakening
global economic data, muted RBI intervention, and heavy, although lumpy,
FII flows in debt. KIE expects this appreciating bias to continue in
the near term, especially given the slew of big ticket IPOs lined up in
the months ahead and the persistence of wider interest rate gap.
However, imminent Fed taper by end- CY2021 and widening domestic trade
deficits should gradually weigh on the rupee.
"We maintain our
CAD/GDP estimate of 1.1 per cent (US$34.1 bn) in FY2022E and BOP surplus
of US$35 billion. We expect USD-INR to remain in the range of 72.5-74
in the near term and will be watchful of shifts in the forex space and
volatility when tapering begins," the report said.
|
|
|
|
|
|
|
|
|
|
|
|
|
Customs Exchange Rates |
Currency |
Import |
Export |
US Dollar
|
66.20
|
64.50 |
UK Pound
|
87.50
|
84.65 |
Euro
|
78.25
|
75.65 |
Japanese
Yen |
58.85 |
56.85 |
As on 13 Aug, 2022 |
|
|
Daily Poll |
|
|
PM Modi's recent US visit to redefine India-US bilateral relations |
|
|
|
|
|
Commented Stories |
|
|
|
|
|
|
|
|