India’s June trade deficit widened to a record $25.63bn, pushed up by rising crude and coal imports from $9.61bn a year ago, raising fears of further pressure. on the rupee.
New Delhi is concerned about rising imports following soaring global crude and commodity prices in the aftermath of the Ukraine war, and rising demand for coal and other goods fueled by the economic recovery. internal. The Indian rupee has sunk 6% against the dollar this year, weighed down by broad greenback strength and investors’ withdrawal from domestic equity markets.
June’s merchandise trade deficit was the highest on record, according to private economists. In the first quarter of the current fiscal year, which ends in June, the merchandise trade deficit more than doubled to $70.25 billion from $31.42 billion in the previous period, according to preliminary trade data released by the Ministry of Commerce and Industry on July 4, 2022.
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Aditi Nayar, chief economist at ICRA, the Indian branch of rating agency Moody’s, said that following the widening of the trade deficit, the current account deficit is likely to double to $30 billion during the April-June quarter, compared to 13,000 million in the previous quarter. “We expect the merchandise trade deficit to remain above $20 billion in the remainder of 2022,” he said.
The June merchandise trade deficit was the highest in history
However, a strong surplus in trade in services and foreign exchange reserves of more than $590 billion give the government confidence that it can manage foreign payments. On July 4, 2022, a senior government official told reporters that India was facing “capital flow headwinds” while the central bank was doing its best to deal with volatility in the currency.
June merchandise imports rose 51.02% year-on-year to $63.58 billion, while exports rose 16.78% to $37.94 billion. The slowdown in the global economy is holding back exports, said Mahesh Desai, chairman of the Engineering Export Promotion Council, noting that high raw material prices and rising logistics costs remain major concerns. “Going forward, the intensity of any additional shocks will depend on the duration of global uncertainties,” he said.
(Reuters)
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India correspondent for Reuters News. She writes about the political, economic and security risks in India. Trade, finance, the treasury, banking, infrastructure and foreign relations are some of the issues that she carefully observed.
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