‘Weak rupee may hit CAD by 10-20 bps’

The Centre expects minimal impact to the current account deficit of about 10-20 basis points due to the rupee depreciation and an increase in the oil import bill, a senior Finance Ministry official said.

“There are times when you have to pay more for oil and in the short term the CAD could be stressed slightly,” the official said. “But oil prices are not showing signs of any great fluctuations and so the CAD will not be as bad as forecast. It will be about a 10-20 basis point impact.”

Moody’s had earlier this week estimated that higher oil prices coupled with the rupee depreciation would widen the current account deficit to 2.5% of GDP.

“Dollar has been appreciating against all other currencies, not just the rupee,” the official added. The rupee, on the other hand, has remained stable in relation to other currencies apart from the U.S. dollar, he noted.