India's balance of payments (BoP) remained in deficit for the second consecutive month in May, recording a $4.4 billion shortfall, though narrower than April's $6.6 billion deficit. This was primarily due to capital outflows of $2.4 billion and a current account deficit of $2 billion. Worries over the BoP deficit have been a significant factor for the Indian Rupee in 2026, exacerbated by the Iran war's impact on oil prices and subsequent capital outflows.
Despite a surprise surplus in the January-March quarter of fiscal 2026, the persistent deficit highlights ongoing economic pressures. The central bank's data also showed net transfers, including remittances, rose to $13.6 billion, offering some cushion. However, the recent flare-up in the Middle East and its potential impact on global oil prices remain a key concern for India's external balance.
For Pakistan's gold and currency markets, sustained high oil prices due to Middle East tensions, as highlighted in this report, could increase inflationary pressures and the import bill, potentially weakening the PKR against the USD and supporting local gold prices.
بحوالہ / Source: www.brecorder.com