IN: Merchandise Trade Balance

December 15, 2016 06:00 CST

Actual Previous
Balance $-13.01B $-10.16B
Exports Y/Y 2.3% 9.6%
Imports Y/Y 10.4% 8.1%

The trade deficit widened out to $13.01 billion in November from $10.16 billion in October and $10.34 billion a year ago. However, over the first eight months of the financial year, the cumulative red ink stands at $66.18 billion, a 25.3 percent reduction versus the same period in FY2015/16.

The headline deterioration reflected a slowdown in annual export growth from 9.6 percent to 2.3 percent, compounded by a jump in import growth from 8.1 percent to 10.4 percent.

The merchandise trade balance measures the difference between imports and exports of goods. The level of the international trade balance, as well as changes in exports and imports, indicate trends in foreign trade and can offer a guide to an economy's competitiveness. Alongside the merchandise data, exports and imports of services are also provided. The statistics, which are not seasonally adjusted, are reported in both local currency and U.S. dollars, the latter being the main market focus.

Changes in the level of imports and exports, along with the difference between the two (the trade balance) are a valuable gauge of economic trends here and abroad. While these trade figures can directly impact all financial markets, they primarily affect currency values in foreign exchange markets.

Imports indicate demand for foreign goods and services in India. Exports show the demand for Indian goods in countries overseas. The rupee can be particularly sensitive to changes in the trade deficit run by India, since the trade imbalance creates greater demand for foreign currencies. The bond market is also sensitive to the risk of importing inflation. Data are reported in US dollars and Indian rupees.