India’s trade deficit widened to the most since August as a 179 percent surge in gold shipments slowed an overall decline in imports.
The gap rose to $11.7 billion in December from $9.8 billion in November, the Commerce Ministry said in a statement on Monday. The drop in imports slowed to about 4 percent in December from a year earlier after a 30 percent decline in November, even as exports plunged about 15 percent. Overseas shipments have declined for 13 straight months.
“Despite the negative surprise on the trade deficit, we think India’s underlying external position remains strong,” Barclays Plc economists Siddhartha Sanyal and Rahul Bajoria wrote in a report. Lower oil prices and a strong surplus in services trade should help shrink India’s current-account deficit to $16 billion in the year through March from $27.5 billion, they predict.
The rupee advanced 0.1 percent to 67.55 a dollar as of 11:09 a.m. in Mumbai, after briefly erasing the day’s gains soon after the data.
Gold shipments rose to $3.8 billion, boosted by demand from the so-called wedding season in India that typically runs through mid-March. Lower global prices also bolstered purchases.