India’s trade deficit in July widened to the most in more than five years, worsening the outlook for the rupee that hit a record low after a Turkish lira-led sell-off in emerging-market currencies.
The trade deficit — gap between exports and imports — was $18 billion in July, fanned by a higher oil import bill, data released by India’s commerce ministry showed on Tuesday. That compares with the $15.7 billion median estimate in a Bloomberg survey of 24 economists and $16.6 billion in June. While a weaker rupee is positive for exports, it poses an inflation risk for a nation that imports more than 80 percent of its crude-oil needs and adds to the stress on the current-account balance.
The rupee dropped to as low as 70.08 per dollar on Tuesday, keeping intact its position as Asia’s worst-performing currency this year.