IN: Merchandise Trade Balance

March 14, 2017 07:00 CDT

Actual Previous
Exports Y/Y 17.5% 4.3%
Imports Y/Y 21.8% 10.7%
Balance $-8.90B $-9.84B

The trade deficit weighed in at $8.90 billion in February, down from $9.84 billion in January but up from $6.57 billion posted a year ago.

Exports had a much better month and annual growth jumped from 4.3 percent to fully 17.5 percent. Excluding petroleum, non-gem exports were 20.2 percent above their level a year ago. Imports similarly picked up sharply, growth here reaching 21.8 percent after a 10.7 percent rate at the start of the year. However, much of the acceleration here was attributable to oil where purchases were up some 60.0 percent. Non-oil import growth was more subdued at 13.7 percent.

Overall, the trend in the trade balance looks to be moving in the right direction with the cumulative red ink over the first eleven months of the fiscal year sliding 24.0 percent to $95.3 billion from the same period a year ago.

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.