According to the CMD of Kotak Mahindra Bank, though these oil prices and gold imports will support the CAD situation in the short-term, the government has to come up with steps to reduce the widening trade deficit in the long-run
Mumbai: The current account deficit (CAD) is likely to improve in the short-term owing to the falling crude prices coupled with a dip in gold imports, said Uday Kotak, chairman and managing director, Kotak Mahindra Bank, reports PTI.
"The CAD is likely to improve in the short-run as oil prices are falling. Also, gold import is expected to be lower than last financial year," Kotak said addressing a Kotak BFSI (Banking, Financial Services and Insurance) conference here.
He, however, said though these factors will support the CAD situation in the short-term, the government has to come up with steps to reduce the widening trade deficit in the long-run.
The CAD was around 4% of GDP in the last financial year, which was just 2.5% in the previous fiscal. At present, financing of CAD looks difficult due to the falling capital inflows owing to the global economic turmoil.
Referring to the European situation, Kotak said there is less possibility of Greece exiting the 17-member monetary union.
"At some level, Germany will give into save the euro zone from breaking up," he said, adding solutions like a euro bond issue may come up in the future.
Kotak also said he is not negative on the markets and the rupee depreciation is helping certain sections of investors.
"The competitive intensity of some exporters have improved drastically due to the rupee fall, and they should take this opportunity to grow as much as possible as such events don't come in often," he said.
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