Economics
Record India Deficit May Limit Rate Cuts as Rupee Drops
This article is for subscribers only.
India’s record current-account deficit threatens to weigh on the rupee and curb the magnitude of interest-rate cuts forecast to begin this month in support of government policies seeking faster growth.
The shortfall swelled to $22.31 billion in the quarter ended Sept. 30, the widest in Reserve Bank of India data beginning 1949. The rupee is down 6.1 percent against the dollar in the past three months, fanning price gains that will limit Governor Duvvuri Subbarao to a 25 basis-point rate cut on Jan. 29, according to eight of 10 analysts in a Bloomberg News survey.