Rupee breaches 67-mark at 15 months low as oil hits $75/barrel

Source: The Hitavada      Date: 08 May 2018 09:10:02



THE rupee on Monday crashed below the 67-mark to close at a 15-month low of 67.13 against the US currency following a surging demand for the dollar as crude oil prices zoomed past USD 75 per barrel level.
Huge dollar purchases by oil-importing companies along with speculative activity largely weighed on the rupee, a currency dealer said.

The rupee drifted sharply to a low of 67.18 in late afternoon deals before concluding at 67.13, revealing a steep loss of 26 paise, or 0.39 per cent.
This is the lowest level for the Indian unit since February 8, 2017 when it had ended at 67.19 against the US dollar. The Indian currency has been the worst performer this year so far, losing 5.10 per cent since January.

A sudden flare-up in global crude prices rattled the forex market sentiment in a big way stoking concerns over widening trade deficit and higher capital outflows. India being a net crude oil importer, a sharp rise in prices could affect the import bill and disrupt the fiscal position, a forex dealer commented.

Oil jumped to its highest levels since late-2014 on Monday to cross the significant USD 75 a barrel tag boosted by Venezuela’s deepening economic crisis and a looming decision on whether the United States will re-impose sanctions on Iran.

Brent crude, an international benchmark, was trading at USD 75.57 a barrel in early Asian trade.“FIIs continue to be net sellers in Indian equities, adding further pressure on the rupee. To this end, CPI release scheduled later this week will be viewed with interest. Markets participants also watched the RBI’s recent move to conduct OMO; to buy Govt bonds worth upto Rs 10,000 cr on 17 May,” said A James, Chief Market Strategist at Geojit Financial Services. Adding to the negative feelings, importers rushed to cover their obligations, while exporters cancelled their previously booked forward contracts on growing expectation of a further fall in the rupee value near term.