Current account deficit remains flat at 1.2% of GDP in Q2

In the financial account, net foreign direct investment recorded a higher outflow of $2.2 billion in Q2 compared to an outflow of $0.8 billion a year ago. However, net inflows under foreign portfolio investment increased to $19.9 billion in the second quarter from $4.9 billion on-year, while ECB inflows amounted to $5 billion, a reversal from the outflows of $1.9 billion a year ago.

NRI deposits almost doubled to $6.2 billion from $3.2 billion a year ago.

Commenting on the CAD numbers, Aditi Nayar, the chief economist at Icra Ratings, said the better than expected reading provides some solace to the sharply weakening rupee.

“Looking ahead, the initial estimate of a record-high trade deficit in November could well bloat the CAD to 2.5-2.7 percent in the third quarter and for the full year it should print in around 1.1-1.2 percent,” she said.