High POL Deficit masks the strong trade performance with Trade Deficit and Services Surplus narrowing sharply to $ 15.60 bn and $ 12.70 bn

India's Trade deficit narrowed sharply to $ 15.60 bn while the services surplus narrowed to $ 12.70 bn from $ 16.70 in the previous month. POL Deficit as a % of Trade deficit was sharply higher at 76% as POL exports were sharply down to $ 5.40 bn from an average of $ 7.10 bn over the previous 11 months. The sharp deficit in gems and jewelry imports recorded in February eased to $ 2.20 bn in the month of March. 

For the year as a whole, Merchandize trade recorded a deficit of $ 238 bn and Services Trade recorded a surplus of $ 167 bn , thus on trade combined India recorded a deficit of $ 78 bn from previous year's $ 122 bn. 

On the transfers and income, India has so far recorded a surplus of $ 41 bn and in the last quarter assuming a number of $ 14 bn, the transfers and income surplus will likely aggregate $ 55 bn , thus leaving a Current Account Deficit for the year as a whole to $ 23 bn. 

In my February Post on release of the Trade data , I had estimated Current Account deficit in the ball park $ 20 - $ 24 bn bracket. 

On the Capital Front, FPI flows have been healthy with Net inflows across Debt plus Equity to the tune of $ 41 bn. 

In most years, a healthy current account and balance of payment picture is good news for the markets but this time the crosswinds of Geopolitics / US Monetary Policy / RBI Reserve accumulation have not seen any corresponding gains in the INR and despite exceptional macro economic performance and healthy fiscal metrics, INR continues to suffer.