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Credit rating agency Acuite Ratings & Research on Monday said it has revised its forecast of India's current account deficit to $68 billion from $106 billion and the balance of payments deficit to $17 billion from $38 billion earlier.

In a research report, Acuite Ratings said India's current account deficit narrowed significantly to $18.2 billion (2.2 per cent of gross domestic product-GDP) in Q3 FY23 from $30.9 billion in Q2 FY23 (3.7 per cent of GDP).

The surplus in the capital account increased to $30.2 billion in Q3 from $22.5 billion a year ago and $1.4 billion in Q2 FY23.

According to Acuite Ratings, the net balance of payments (BoP) moved into positive territory, standing at a surplus of $11.1 billion (1.3 per cent of GDP) in Q3 FY23 - a turnaround from a deficit of $30.4 bn (3.7 per cent of GDP) in Q2 FY23.

The softening of the global commodity prices, strength in services trade and transfer payments and the robust momentum in banking capital as shown by the Q3 data provides comfort on India external sector, said Acuite Ratings.

"Given the material moderation in monthly trade deficit and softening in crude oil prices, we revise our FY23 current account deficit forecast to $68 billion from $106 billion earlier, and BoP deficit estimate to $17 billion from $38 billion earlier," the credit rating agency said.

"Clearly, this has provided fundamental support to the INR (Indian Rupee) even in a challenging external environment and enabled it to stay in a relatively narrow band of 81-83 over the last 6 months," the report said