Rupee Weakness Persists Despite India's Current Account Improvement

• India's goods trade deficit sharply narrowed to $24.5 billion in November from $41 billion in October, easing current account stress.
• The improvement was driven by lower gold/silver imports and robust 20% export growth, particularly in labor-intensive sectors.
• Economists Santanu Sengupta (Goldman Sachs) and Madhavi Arora (Emkay Global) expect CAD to shrink further, possibly near zero next quarter.
• Despite CAD improvement, the rupee continues to weaken, hitting new lows, attributed to capital account dynamics, lower inflows, and RBI's short forward book.
• A US trade deal is not seen as a "silver bullet" for the rupee; experts forecast rupee to peak around 91.

Why It Matters: India's current account stress is easing, but rupee weakness may continue due to capital dynamics.