INSUBCONTINENT EXCLUSIVE:
Oil prices have slumped by more than 30 per cent since early October.Mumbai: High oil prices pushed country's current account deficit in
July-September to its widest in over four years, according to data released by the central bank on Friday.However, the current account
deficit is likely to fall due to a sharp drop in crude prices that will take pressure off a depreciating rupee, analysts said."The current
account deficit has peaked," said Shubhada Rao, chief economist at Yes Bank in Mumbai.The rupee fell 14 per cent in the first nine months of
2018 but has recovered by 5.6 per cent since October on the back of the drop in oil prices.The current account deficit in July-September hit
2.9 per cent of gross domestic product or $19.1 billion, the highest since April-June quarter of 2013
In July-September 2017 the current account deficit was $6.9 billion or 1.1 per cent of GDP, Reserve Bank of India data showed.Country's
trade deficit in July-September widened to $50 billion from $32.5 billion a year ago
Overall, balance of payments was in deficit to the tune of $1.9 billion in the September quarter, compared with a surplus of $9.5 billion a
year ago."Going ahead, an improvement in the current account deficit, along with some degree of capital inflows, will ease the pace of
depreciation in the rupee
However, we are riding a political cycle, the outcome of which will have some bearing on the rupee," Yes Bank's Rao said.The bank has
lowered its current account deficit projection for the full fiscal year 2018/19 to 2.3 per cent of GDP from 2.9 per cent, while balance of
payments deficit is expected to be at $12 billion, Rao said.Oil prices have slumped by more than 30 per cent since early October, pressured
by concerns supply will exceed demand in 2019 as economic growth slows.India imports two-thirds of its oil needs and the sharp oil price
fall will reduce its trade deficit, ease inflation and boost the rupee and improve overall macro-economic fundamentals, according to
analysts.However, investors will also be keeping an eye on the outcome of the key state elections due out on Tuesday for cues on the general
elections scheduled by May.Prime Minister Narendra Modi's Bharatiya Janata Party is set to lose two heartland states - Rajasthan and
Chhattisgarh while the third is too close to call, exit polls showed on Friday in the final test of popularity before the national election
in mid-2019.For the latest News Live Updates on Election Results from each assembly constituency in Madhya Pradesh, Rajasthan, Mizoram,
Chhattisgarh, Telangana, like us on Facebook or follow us on Twitter for updates.
