Rising global commodity prices, led by crude, coal and metals, will shave a lot off the current account leading to higher imports and a rise in current account deficit, which is likely to print at 1.3 per cent of the GDP or USD 40 billion, up from 0.9 per cent surplus last fiscal, according to a brokerage report.
However, the report, by the Wall Street major Bank of America Securities, said the balance of payments (BoP) is strong enough to defend any US Federal Reserve taper impacts on the rupee and the bond yields even though the BoP peak is history now.
Given the sharp increase in global commodity prices, particularly oil, concerns about current account deficit (CAD) and its serviceability have resurfaced. Potential taper by the Fed has only added to these jitters.
