India's current account gap narrowed sharply to 5.2 billion US dollars, or 1.2 per cent of GDP, in the July-September quarter of 2013-14 on the back of turnaround in exports and decline in gold imports.

The current account deficit (CAD), the difference between outflow and inflow of foreign exchange, was 21 billion US dollars, or 5 per cent of the GDP, in the second quarter of last fiscal.

Both the government and RBI are expecting the CAD to be below 56 billion US dollars in the current fiscal compared to the record high of 88.2 billion US dollars, or 4.8 per cent of the GDP last fiscal.

Besides, pick up in exports, the steps taken by the Reserve Bank and the government have resulted in a sharp decline in gold imports, which was one of the main contributors to high CAD last year.

The RBI also said that the state run oil refiners have returned to the foreign exchange market to meet all their dollar requirements as volatility in currency rates has eased over the past few weeks. In a statement the apex bank said that the public sector oil marketing companies (OMCs) have started accessing the foreign exchange market for their entire daily dollar demands since last week.

The Bank also said that it will consider opening the swap window, which had been made available to Oil Marketing companies since August end, on rare days when there is a pronounced spurt in dollar demand.