India’s trade deficit for November shot up to $16.8 bn, the highest single month deficit since May 2013. (When the dollar was at 55, and in November it was 61+)
What happened here? Exports grew 7% from last year but imports grew at a much faster pace at nearly 27%!
And while oil imports fell (due to the collapse in crude oil prices) we saw non-oil exports hit the roof!
(This is the highest non-oil import number, ever)
Mostly, the non-oil number is Gold – at $5.6 bn. This might be because some import restrictions were removed (but they were at the fag end of November, and honestly, they were useless restrictions.) The main restriction is the 10% import duty which does not seem to have deterred imports at all
The jump in imports is a significant one. That might explain why India has seen a sudden jump in the exchange rate, to Rs. 63.6. As foreign inflows turn volatile, the offset has to be lower imports, and apparently there is no such thing.
To subscribe to new posts by email, once a day, delivered to your Inbox:
Also, do check out Capital Mind Premium, where we provide high
quality analysis on macro, fixed income and stocks. Also see our
portfolio which has given stellar returns in our year, trade by trade
as we progress. Take a 30-day trial: