"The result of the high current-account deficit has been the depreciation of the rupee, " he said.
But high inflation and a wide current-account deficit present obstacles to any such moves.
Many American economists and policymakers have long argued that the current-account deficit does not matter.
The current-account deficit is no more than the accounting counterpart of that net inflow of capital.
All of which should help increase the trade surplus and further reduce the current-account deficit.
It is in good shape, with inflation at 9% and the current-account deficit improving.
Russia faces its first-ever current-account deficit, and much of its industry is in terrible shape.
America's current-account deficit is big and growing, and this is a legitimate cause for concern.
Notably, it had a large current-account deficit and a foreign-debt burden that was rising fast.
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The current-account deficit is more worrying because it suggests that competitiveness is steadily eroding.
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Such developments will make it harder for America to finance its huge current-account deficit.
The current-account deficit, now around 5% of GDP, has reached levels which alarm some economists.
Partly because of privatisation, foreign direct investment should finance perhaps 60% of the current-account deficit.
It was the dollar that was losing support, as swing voters fretted about America's current-account deficit.
Without tax cuts the economy would have been weaker (and the current-account deficit smaller).
Thailand, whose whopping current-account deficit helped trigger the turmoil, is now running a monthly current-account surplus.
Rate cuts could potentially widen the current-account deficit by encouraging consumption and boosting demand for imported goods.
For years economists have predicted that America's huge current-account deficit would eventually cause its currency to plunge.
The bail-out plan makes unprecedented demands for fiscal adjustment to trim both the current-account deficit and inflation.
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Part of the reason is that capital inflows have gone mainly to finance its persistent current-account deficit.
However, it lowered its growth outlook for this year and next and said the current-account deficit will continue.
His policies allowed domestic demand consistently to grow faster than supply, causing America's current-account deficit to swell alarmingly.
In May and June Turkey was hit particularly hard because of its high current-account deficit and expensive currency.
The keener investors are to hold a country's assets, the bigger its current-account deficit will tend to be.
This matters, because a country that continually runs a current-account deficit will become ever more indebted to foreigners.
India's high inflation and chunky current-account deficit, financed by capital flows, mark it out from most of Asia.
Together with Japan's central bank, the People's Bank of China financed half of America's current-account deficit last year.
This year foreign capital has gone into reverse at the same time as India's current-account deficit has widened sharply.
America, in turn, has been overly reliant on foreign capital inflows, so as to finance its record current-account deficit.
In January, it also cautioned that high inflation and the country's wide current-account deficit would constrain future rate cuts.
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