By Suvashree Choudhury
MUMBAI (Reuters) - India's overall balance of payments slipped into deficit for the first time in six quarters in April-June on large foreign dollar outflows.
The deficit , a measure of economic transactions between the country and the rest of the world, stood at $11.3 billion, compared to a surplus of $11.4 billion a year earlier, Reserve Bank of India data showed on Friday.
The current account also posted a deficit, which rose to $15.8 billion or 2.4 percent of gross domestic product from $15.0 bln or 2.5 percent a year ago. The merchandise trade gap widened to $45.7 billion from $41.9 billion.
Both deficits have widened "beyond comfort levels" as a consequence of the current global environment of higher rates and tight dollar liquidity, said A. Prasanna, chief economist at ICICI Securities Primary Dealership in Mumbai.
Also Read
"Funding this gap with stable flows is difficult and that is reflected in the rupee's weak performance."
A rout in emerging markets led to dollar outflows of $8.1 compared with inflows of $12.5 billion a year ago, leading to a sharp fall in the rupee.
The rupee has fallen by 11 percent, the most among Asian currencies, since January, touching a record low of 72.11 to the dollar on Thursday.
Many analysts expect the imbalances to ease by the December quarter as foreign dollar outflows slow down, helping the rupee to stabilizes around current levels.
Prasanna expects the year to March current account deficit to be around 2.8 percent of GDP or $80 billion and the balance of payments deficit to reach $20 billion.
"In the base case, we expect the rupee to stabilizes around current levels," he said.
Strong intervention by the central bank on Friday helped the rupee to end at 71.73/dollar, up 0.37 percent in the day for its best intraday gain since Aug. 20.
(Reporting by Suvashree Dey Choudhury; editing by John Stonestreet)
(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)