IN: Merchandise Trade Balance

Tue Nov 14 06:00:00 CST 2017

Actual Previous
Balance $-14.02B $-8.98B
Exports Y/Y -1.12% 25.67%
Imports Y/Y 7.6% 18.09%

India's merchandise trade deficit widened from $8.98 billion in September to $14.02 billion in October, the largest monthly deficit since late 2014. This increase in the deficit was mainly driven by sharp drop in export growth, down 1.12 percent the year in October after an increase of 25.67 percent in September. Import growth also weakened but to a lesser extent, with year-on-year growth moderating from 18.09 percent in September to 7.60 percent in October.

Services trade data are released a month after the equivalent merchandise trade data. Services exports advanced 0.23 percent on the year in September after stronger increase of 3.97 percent in August, while year-on-year growth in services imports weakened from an increase of 18.05 percent to a decline of 2.40 percent. This resulted in a services trade surplus of $5.28 billion in September, up moderately from $5.04 billion in August.

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.