CAD threatens rupee stability in coming days

Observer Report

The current account deficit (CAD) may pose a challenge to the rupee stability in the coming days, despite record inflows of export receipts and workers’ remittances.

The current account posted an unexpected $1.64 billion in June 2021. The monthly current account deficit deteriorated the full-year balance of payment.

Analysts at Topline Research said the current account deterioration in June 2021 was largely due to an increase in the imports of goods, which recorded a rise of 27 percent MoM, or $1.363 billion, to clock-in at $6.322 billion.

After the higher deficit in June 2021, the analysts are now expecting the current account deficit in the range of $7 billion to $8 billion (2.2 percent to 2.6 per cent of GDP) in 2021-22, compared with the earlier estimate of $4.4 billion for the year.

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