India’s Trade Deficit Widens After Gold Import Surge

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.

via Bloomberg

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza