Overview

• India's merchandise trade deficit rose to an all-time high of $31.46 billion in October, widening sharply from the $19.37 billion print in the prior month.
• The sharp rise in the trade deficit was largely due to a surge in imports, particularly of oil, gold, and silver. Gold and silver imports were likely driven by demand ahead of the Diwali festive season.
• Analysts predict that the October print is likely to be a one-off, with gems and jewellery imports expected to normalize from November onwards.
• Despite the shock on the trade deficit front, the FY24 current account deficit (CAD) estimate is retained at 1.9% of GDP.
• The Indian rupee fell by about 2.47% against the US dollar over the same period.