Trade deficit rise pushes up Q3 CAD to $13.5 billion... 2% of GDP

The CAD, which shows the difference between foreign exchange earned and spent, stood at $7.2 billion or 1.1 per cent of gross domestic product (GDP) in the preceding September quarter, according to data released by the central bank on Friday.

"The widening of the CAD on a year-on-year basis is primarily due to a higher trade deficit which rose to $44.1 billion in the reporting quarter due to a larger increase in merchandise imports relative to exports," the central bank said in a statement.

On a cumulative basis, CAD more than doubled to 1.9 per cent of gross domestic product in the April-December 2017 period from 0.7 per cent in the corresponding period of 2016-17 due to wider trade deficit, which increased to $118.9 billion from $82.7 billion.

Net services receipts rose 17.8 per cent during the reporting quarter mainly on the back of a rise in net earnings from software services and travel receipts.

Private transfer receipts, mainly representing remittances amounted to $17.6 billion, an increase of 16 per cent over a year ago.

In the financial account, net foreign direct investment stood at $4.3 billion, almost 55 per cent less than in the year-ago period when it was at $9.7 billion, the apex bank data showed.

However, net portfolio investment inflows were in the green at $5.3 billion in Q3, compare to an outflow of $11.3 billion in the year-ago period, due to net purchases in both the debt and equity markets.

Net receipts on account of non-resident deposits amounted to $3.1 billion in the reporting quarter as against net repayments of $18.5 billion a year ago.

During the three months to December 2017, the forex kitty swelled by $9.4 billion (on balance of payment basis) as against a depletion of $1.2 billion in third quarter of last financial year.

During this period, forex kitty saw an accretion $30.3 billion to the foreign exchange reserves.

Net foreign direct investment inflows during April-December 2017 declined to $23.7 billion from $30.6 billion, while net portfolio inflows stood at $19.8 billion during the period as against a net outflow of $3.2 billion a year ago.