India recorded a lower-than-expected trade deficit of $10.9 billion in August, as a rapidly depreciating rupee aided exports and India imposed tighter restrictions on gold imports to rein in the country’s soaring current account deficit.

India recorded exports worth $26.14 billion in August, an increase of 12.97 percent over August 2012, while imports added up to $37.05 billion, declining 0.68 percent year-on-year. The trade deficit was $14.1 billion in the same period in 2012.

“Gold imports are coming down consistently,” India’s commerce and industry minister, Anand Sharma, was quoted as saying by Economic Times

Indian gold showroom
Employees wait for customers inside a gold jewelry showroom in New Delhi on Aug. 13, 2013. Photo: Reuters

“Exports are on a firm, positive terrain now. I remain optimistic about exports being in positive territory,” he said, but added that a sharp fall in the rupee may not be the only reason behind improved exports. “45% of exports have imported contents. I don't think weak rupee has any impact on positive export results.”

Oil imports in August were worth $15 billion, 17.8 percent higher than oil imports worth $12.8 billion reported in the corresponding period last year.

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India has a current account deficit of $98 billion, or 4.9 per cent of GDP, which is the third-highest in the world in absolute terms, behind the U.S. ($473 billion) and the UK ($106 billion), according to Morgan Stanley.

The rupee, which depreciated by 7.8 percent in August, was trading at 64.06 in late-afternoon trade on Tuesday, significantly higher than the all-time low of 68.85 the domestic currency hit against the dollar in August.