Overview

• The Indian rupee recovered 12 paise in early trade on May 16, reaching 85.42 against the US dollar after a sharp 18-paise drop on May 15.
• The recovery was supported by strong foreign institutional investor (FII) inflows and a softer dollar index, despite pressures from importer dollar demand and portfolio outflows.
• India's trade deficit widened to a five-month high of USD 26.42 billion in April, as imports rose 19.12% year-on-year, driven by crude oil and fertilizer shipments.
• Export growth hit a six-month high in April, rising 9.03% to USD 38.49 billion, bolstered by electronics and engineering goods sectors.
• The Reserve Bank of India is expected to continue intervening in forex markets to manage volatility, with the rupee likely to trade within a range of 85.25–85.75 in the near term.