Goldman Sachs says India's current account deficit likely peaked at 4.0% of GDP in FY12 and will improve gradually due to the sharp depreciation in the INR and falling oil prices. The house says every 1.0% real depreciation in the INR leads to a 1.1% increase in exports with a lag of two months and a similar fall in imports after four months. Its base case scenario for FY13's current account deficit is 3.5% of GDP but if oil prices remain at $90/bbl it could even fall to 2.3% of GDP. Data from the RBI for January-March and the FY12 balance of payments are due at 1130 GMT Friday.
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