Finally, some good fiscal news

Exports rise, imports remain steady and trade deficit falls to the lowest in six months

September 10, 2013 11:50 pm | Updated November 16, 2021 09:14 pm IST - CHENNAI

After days of gloomy news, Tuesday brought cheer as economic and market indicators turned green all around. The critical trade data for August set the tone as exports rose, imports remained steady, and the trade deficit fell to the lowest level in six months.

The markets opened in positive territory with the rupee starting substantially higher along with the S&P BSE Sensex as oil prices fell and the threat of war in Syria receded. The good news on the trade front gave a further ballast to the markets. Exports jumped 13 per cent in August to $26.14 billion on a year-on-year basis while imports fell by a marginal 0.68 per cent to $37.05 billion. Consequently, the trade deficit dropped to $10.9 billion in August from $14.17 billion in the same month last year.

The rupee opened higher with a big gap of 94 paise, and built on that to end the day at Rs. 63.84 to a dollar, an appreciation of Rs.1.40 or 2.15 per cent. Not to be left behind, the stock market joined the party, and the Sensex closed just a shade below the psychological 20,000 points level. The 727.03 point rise on Tuesday was the biggest single day gain in the last four years.

The expectation that the tapering process of the U.S. Fed will be delayed following not-so-encouraging jobs data helped the rupee’s rise. Falling oil prices — Brent crude fell to $113 a barrel levels during the day — further fuelled positive sentiment.Among other positive news during the day was the passenger car industry returning to growth territory. The car industry, which has been on a steady downhill ride for many months now, reported a 15.4 per cent jump in sales in August. This rise comes on top of a low base in August 2012 due to labour unrest in Maruti Suzuki. Not surprisingly, the Society for Automobile Manufacturers (SIAM) cautioned that ``this is not a turnaround’’.

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