Balance of Payments - All is Well :: Edelweiss

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Current account deficit (CAD) for Q2FY15 at ~USD10bn (2.1% of GDP) came in line with our estimates and marginally higher than USD8bn (1.8% of GDP) in last quarter. Sequential widening of CAD was mainly on the trade front, while invisibles were more or less stable. Trade deficit widened owing to moderation in exports and higher gold and non-oil and non-gold imports (due to improvement in domestic economy). Capital flows remained healthy resulting in ~USD7bn surplus in Balance of Payment (BoP). Overall, current account remains benign (~2% GDP) and should hold forth going forward as well given the recent correction in oil prices. We maintain our FY15 CAD forecast of 2% of GDP.

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