The current account deficit (CAD) is likely to have shrunk to USD3.5bn (0.4% of GDP) in Q1FY24, with the services trade surplus widening by USD5.32bn YoY, while the merchandise trade deficit declined by US$5bn YoY. Given that the first two quarters of a fiscal year are seasonally weaker, the sharp YoY decline in CAD (which is likely to persist into Q2FY24 as import prices of crude oil, coal, fertiliser and edible oil are down sharply YoY) is likely to result in a small current account surplus in FY24.