Seeking to calm currency markets, the Reserve Bank on Wednesday said the current account deficit in 2013-14 will be $56 billion — much lower than the quantum projected earlier — and there is no fundamental reason for rupee depreciation.
“Our estimate now is that CAD this year will be $56 billion, less than 3% of GDP and $32 billion less than last year... Of course, some of that compression comes of our strong measures to curb gold import,” RBI governor Raghuram Rajan said at a hurriedly called press conference.
The current account deficit (CAD), which is the difference between outflow and inflow of foreign exchange, touched an all-time high of $88.2 billion or 4.8% of the GDP in 2012-13.
Earlier, the government had projected the CAD in the current fiscal at $70 billion, which was revised downwards to $60 billion by finance minister P Chidambaram on back of declining gold imports and recovery in exports.
Referring to the recent decline in the value of rupee, the RBI chief said there is “no fundamental reason for volatility in the exchange rate”.
Continuing its slide for the sixth straight day, the rupee lost 17 paise to trade at a fresh two-month low of 63.88 in early trade on strong dollar demand from importers.
Rajan further said RBI was weighing various options to contain exchange rate volatility and would come out with ‘appropriate’ steps in the future.