Axis Bank is less worried about the rupee
In November, Axis Bank reported that pressure on the Indian rupee had eased due to returning foreign portfolio investment (FPI) inflows and a decrease in global oil prices. Axis Bank's report indicated that the widening merchandise trade deficit to $40 billion in October was largely due to seasonal trends and a higher gold deficit, with gold imports remaining below historical levels.
The easing in oil prices and a strong return of FPI flows helped contain near-term pressure on the rupee. FPI inflows in November reached $9.6 billion, while the 12-month rolling average of forward crude oil prices moderated to around $87 a barrel. Despite the October merchandise trade deficit widening, Axis Bank expects India's current account deficit to remain around 1% of GDP in FY27, supported by a strong services surplus.
The bank anticipates that wider deficits seen in the second and third quarters will be offset by narrower gaps in the first and fourth quarters.
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