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Trade deficit may continue to widen in 2nd half of FY22
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SME Times News Bureau | 05 Sep, 2021
India's trade deficit is likely to continue widening during the second half of the current financial year.
Kotak
Economic Research report noted that imports in August increased further
as economic activity continued to normalize and exports continued to be
strong but have stagnated at the current levels, for now, leading to a
widening of the trade deficit.
"We expect the current trend to
continue in 2HFY22 and maintain our FY2022E CAD/ GDP estimate at 1.1 per
cent. We continue to pencil in USD-INR within 72.5-74 in the near
term," it said.
Exports in August increased 45.2 per cent to
$33.1 billion but declined sequentially by 6.5 per cent. Non-oil exports
at $28.6 billion increased 36.6 per cent while falling 3.3 per cent
sequentially. Compared to August 2019, exports were higher by 27.5 per
cent and non-oil exports increased by 25.5 per cent.
However,
exports have been stagnating around the current levels after a sharp
spike in March 2021. Top exports in August (over August 2020) were gems
and jewellery (88 per cent), engineering goods (58.8 per cent), cotton
and handloom products (55.6 per cent), and chemicals (35.8 per cent).
Imports
in August increased 51.5 per cent to $47 billion while increasing
sequentially by 1.3 per cent (July: $46.4 billion). Non-oil import was
at $35.4 billion increasing 43.9 per cent, while increasing
sequentially by 5.6 per cent. Compared to August 2019, imports were
higher by 18 per cent and non-oil imports increased by 22.6 per cent.
"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 normalization in the US, and spread of Covid cases," it
said.
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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 |
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