India trade deficit for August 2020 - Angel Broking

Mr. Jyoti Roy - DVP - Equity Strategist, Angel Broking Ltd

"India's merchandise trade deficit for the month of August 2020 stood at USD 6.77bn as compared to USD 13.86bn in August 2019. Exports for August 2020 were down by 12.66% YoY to USD 22.70bn, while imports were down by 26.0% YoY to USD 29.47bn. The trade deficit has been increasing since June when India posted a trade surplus of USD 790mn while the trade deficit for July 2020 stood at USD 4.83bn. Going forward we expect that the trade deficit is likely to increase somewhat from current levels as economic momentum picks up. The economic slowdown and sharp fall in fuel prices due to Covid-19 has led to compression of India merchandise trade deficit which coupled with strong FPI flows have led to a strengthening bias on the rupee. In order to counter an appreciating rupee the RBI has been intervening in the forex market which is reflected in India's foreign exchange reserves which has hit all time highs of USD 542bn as on the 4th of September. While we expect the trade deficit to increase going forward we expect overall BoP to remain in the surplus barring any unforeseen event which will put pressure on the USD relative to the INR. In order to counter the appreciating bias we expect continued intervention by the RBI in the forex market as the Government and the RBI would not want the rupee to appreciate significantly from current levels though may tolerate some amount of appreciation."

Source : Equity Bulls

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