Despite net portfolio outflows of a considerable $14.6 billion, the forex reserves saw a modest rise of about $4.6 billion in the quarter on a balance of payments (BOP) basis. This was because the capital account saw a good surplus of close to $28 billion helped by robust inflows as FDI, loans and banking capital.
However, that doesn't allay the worries on the BoP front much. Many analysts see the CAD having widened further in the September quarter-Icra, for instance, forecast the CAD to worsen to 4.2-4.8% of the GDP in Q2FY23.
While the merchandise trade deficit was $68.6 billion in Q1FY23, already an all-time high for any quarter, this deficit could be even higher in Q2 - record monthly deficit of $30 billion was reported in July before it eased a tad in August to $28 billion.
While imports continued to be strong in Q2FY23, exports remained subdued amid demand slowdown in recession-hit US and the EU markets.
This story is from the September 30, 2022 edition of Financial Express Mumbai.
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This story is from the September 30, 2022 edition of Financial Express Mumbai.
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