Rising oil prices could pose a microeconomic challenge for India and widen the nation’s trade deficit by $10 billion to $25 billion but it is unlikely to impact rupee, bonds and monetary policy, according to experts.
“The higher payouts that we make for oil consumption are not offset by lower imports or some other goods and commodities,” said Hitendra Dave, head of global banking and markets at HSBC India. “I think this is the scale of the challenge that trade deficit could widen by a minimum $10 billion and a maximum $25 billion.”
“Will that cause a significant re-rating of the currency. I am not very sure about that,” he added. Dave said market awaiting clarity on fiscal deficit in the budget. Read More