Trade Balance Sticky And Elevated In December, 2021: Emkay Global

Trade balance remained largely sticky and elevated in Dec'21 at USD22bn vs last month, despite better sequential gains in exports 24% MoM as compared to imports 12% MoM amid elevated commodity prices and improving domestic demand., Emkay Global has said in a report.

"Non-oil non-gold (NONG) imports continued to see healthy 34.2% YoY growth but rose marginally on a sequential basis. Exports and imports posted all-time highs in value terms. We see CAD-to-GDP at 1.7% in FY22E and expect it to stay range-bound at 1.8%+ in FY23E. New global/domestic headwinds amid Omicron and persistent supply constraints would be the key things to watch out for. However, healthy capital flows will ensure that FY22E BoP remains in a surplus of USD41bn, which could moderate to USD30bn in FY23E. We see USD-INR hovering in the range of 74-76.50 in the near term. Factors like the LIC IPO and India's inclusion in GBIs in the coming quarters could spur flows in mid-CY22 and may be a temporary boost to INR," Emkay Global has said in a report.