India’s current-account deficit widened less than economists estimated in the second quarter and analysts including Goldman Sachs Group Inc. said gold-import curbs will help moderate a shortfall that’s hurt the rupee.
Goldman Sachs Group Inc. warned that “negative feedback loops” triggered by waning investor confidence are threatening India’s finances, after state-owned lenders’ bond risk surged the most in Asia this quarter.
It’s fashionable to say the era of strong emerging-market growth is over. As the U.S. recovers, the global cost of capital will rise, holding back investment; against this background, avoiding the next crisis is the best that most emerging economies can do. If you take this view, India might seem a perfect example, with its widening current account deficit, heavy public borrowing, persistent inflation and weak currency.
India’s rupee completed its ninth weekly drop, the longest losing streak in a year, after foreign funds continued to pull money from the nation’s debt as the Federal Reserve prepares to phase out its stimulus.