NEW DELHI: The Indian rupee may continue to face depreciation pressure as a result of exports plateauing and the ensuing widening of the current account deficit, said the Economic Survey 2022-23 tabled in Parliament on January 31. "Risks to the current account balance originate from numerous sources," it said.
As per the latest data from the Reserve Bank of India, the country's current account deficit (CAD) increased to 4.4% of GDP in the quarter that ended in September from 2.2% in April-June as a result of a larger trade imbalance. The rupee lost 12 paise to 81.64 against the US dollar in Tuesday's opening trading as a result of considerable foreign fund outflows and a sluggish trend in domestic stocks.
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The geopolitical environment and US Federal Reserve's tightening of monetary policy have put pressure on the Indian rupee, which has even crossed the 83-mark to the US dollar.
Despite falling from record highs, commodity prices, according to the Survey, are still higher than "pre-conflict" (Russia-Ukraine war) levels.
India's total import bill will increase due to increasing domestic demand and commodity prices, which will also add to unfavourable trends in the current account balance, it said.
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"These could be made worse by stagnant export growth as a result of slowing global demand. The currency may face depreciation pressure if the current account deficit widens further "stated the important paper, which was published the day before the Union Budget 2023–24 was presented.
The Survey is a government analysis of economic trends and associated topics for 2022–2023.
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