Rupee hits over one-month low as oil, inflation hurt
MUMBAI (Reuters) - The rupee weakened to its lowest level in more than a month on Monday as surging crude oil prices threatened to push up domestic inflation pressures and aggravate the country's current account deficit.
Alongside, data showed wholesale price inflation in India accelerated to a five-month high of 6.01 percent in May, which further hurt the rupee and pulled it down intraday to 60.23 per dollar, a level last seen on May 6.
Brent crude rose towards $113 a barrel on Monday after a strong rally last week, as Sunni insurgents advanced in Iraq, intensifying concerns over a potential disruption to oil exports from the second-largest OPEC producer.
India imports nearly two-thirds of its oil needs, leaving its currency especially vulnerable to price swings.
Traders were also seen buying the greenback as they looked to square off their short dollar positions.
"As long as the Iraq crisis continues, this should be the trend for the time being. And, if RBI doesn't intervene, and the Iraq crisis continues, it will definitely remain below 60 to the dollar," said Ashtosh Raina, head of forex trading at HDFC Bank.
The central bank is expected to buy or sell dollars to prevent any excessive volatility in the currency.
In recent months, the central bank has been aggressively buying dollars to prevent sharp gains in the rupee from hurting export growth while also building up its foreign exchange reserves.
The partially convertible rupee ended at 60.1550/1650 per dollar versus its previous close of 59.76/77 on Friday.
Equities also fell on Monday, to their lowest close in 1-1/2 weeks on risk aversion among investors due to tensions in Iraq and Ukraine.
Traders will now focus on whether the dollar can gain more should the U.S. Federal Reserve provide new hints on the timing of interest rate hikes when it concludes its two-day policy meeting on Wednesday.
For the near-term, traders expect the rupee to trade in a 59.90/60.20 range.
In the offshore non-deliverable forwards, the one-month contract was at 60.52, while the three-month was at 61.11.
(Reporting by Neha Dasgupta; Editing by Kim Coghill and Prateek Chatterjee)
- Tweet this
- Share this
- Digg this
- U.S. nurse defies Ebola quarantine with bike ride; negotiations fail
- In his native Alabama, Apple CEO's announcement he is gay prompts discomfort for some
- Islamic State fighters kill 220 Iraqis from tribe that opposed them
- PM Modi boots officials out of the first class cabin
- Govt considers ban on e-cigarettes, sale of single smokes
The BSE Sensex and Nifty on Friday rose to their second consecutive record highs. The 30-share Sensex surged as much as 1.52 percent to an all-time high of 27,762.13. The broader Nifty gained as much as 1.49 percent to a record of 8,291.65. Full Article
China's shadow banking sector growing rapidly, third largest in world - FSB. Full Article