Trade deficit set to widen further

Mumbai: The expected rise in trade deficit to about $20 billion this month, along with high crude oil prices, will weaken the Indian rupee further during the upcoming week. The rupee is likely to range near 75 to a US dollar during this period. India's trade deficit is rising as the economy recovers and imports swell. Besides, FIIs have been on a selling spree in India's equity market. However, the rate of share off-load has significantly come down during the last few sessions.

"With the economy reaching normal levels, imports shall increase and we expect trade deficit to hit $20 billion a month," Edelweiss Securities' Head, Forex and Rates, Sajal Gupta, said. "Crude is also expected to remain strong on back of global demand coming back. This might lead rupee to seesaw between 74.25 to 75.25 with a weaker rupee bias. Taper risk shall keep the rupee from strengthening."