Thursday, May 3, 2012

India's highest ever trade deficit in FY 12

                                                                   Source: Business Standard

Above chart highlights how India's trade deficit has reached the highest ever level in FY12. While our imports have exceeded imports most of the time, the difference in FY12 has come as high as US$ 185 bn. Combine this with weak capital inflows and one gets an idea on why rupee seems to be under immense pressure. Unless petro prices cool off, we do not think a big respite is in the offing any time soon. Of course, imports of precious metals such as gold have also caused the problem to exacerbate a bit. 

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