Current account deficit may cap rupee gains: HSBC

Says India needs bolder action in medium term to bring down trade deficit

HSBC said India's large current account deficit will remain a source of "discomfort" for the market and make it difficult for the rupee to appreciate in a sustained manner.

However, the rupee weakness may be limited as the trade deficit has been priced in somewhat, while debt inflows have remained 'strong' recently, the note said.

A further deterioration of the trade deficit and the speed of reforms pose risks to the rupee, HSBC added.

The bank says India needs bolder action in the medium term to bring down the trade deficit and ease regulations to allow more FDI into the country.