Moderation in gold imports to lower CAD in 2013-14

The Reserve Bank on Monday said the Current Account Deficit (CAD) will moderate in the current fiscal on account softer global commodity prices and recent measures to dampen gold imports.

"Softer global commodity prices and recent measures to dampen gold imports are expected to moderate the CAD in 2013-14 from its level last year," the RBI said in its mid- quarter monetary policy review statement.

The CAD, which is the difference between the outflow and inflow of foreign currency, is estimated to be around 5 per cent of the GDP in 2012-13 fiscal. The CAD had touched a record high of 6.7 per cent in the October-December quarter. RBI said trade deficit has widened in April-May due to surge in festival related or seasonal gold imports.

"Available evidence suggests that a moderation in gold imports could be underway in June," the RBI said.

According to the official data released today, trade deficit widened to $20.1 billion in May from $17.8 billion a month ago.

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