Trade deficit widens to multi-year highs
“The recent surge in oil prices has been detrimental to the INR, and as such the currency should remain under pressure until the supply-related bottlenecks causing the energy crisis abate.”
The trade deficit widened to a record high in September amid surging commodity prices, exacerbating the INR’s recent weakness.”
The RBI recently stopped its bond purchasing programme (GSAP), a clear indication of policy normalisation, and as such we believe that monetary policy should be supportive of the INR in the medium-term, especially with the RBI poised to deliver a rate hike by 2Q22.”
“Foreigners remain net buyers of Indian equities, while they turned net sellers of Indian bonds in October following a couple of months of strong inflows. As such, portfolio flows, despite losing some momentum this month, remain supportive of the currency.”
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