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ANZ analysts point out that led by a smaller merchandise trade deficit, India’s current account deficit narrowed to 0.9% of GDP in Q2 FY20 (quarter ending September).

Key Quotes

“Both FDI and portfolio investment remained resilient allowing the basic balance of payments to return to a surplus.”

“Trade data for October and November and strong trade seasonality in the final quarter of the fiscal year suggests further improvement in the current account. We therefore revise lower our forecasts for FY20 and FY21. Escalating oil prices have, however, emerged as a key risk.”