Mumbai: The rupee weakened against the US dollar on Monday and breached its psychological 60 level mark as soaring global crude oil prices amid the crisis in Iraq dampened sentiments. After touching a low of 60.22 per dollar, the rupee finally ended the day at 60.15 as compared to its previous days close of 59.76 per dollar. The wholesale price based inflation (WPI), which sprang an upside surprise also had a negative impact on the rupee.
“Though it was a double whammy for the rupee on Monday, what is bothering the market participants more is the escalating crisis in Iraq. Importers were seen buying more dollars following fears about a further increase in global crude oil prices,” said Hariprasad M.P, head of treasury at Centrum Direct. According to him, the rupee is expected to remain under pressure until the situation in Iraq stabilise.
Since India meets two thirds of its oil requirement through imports, the rupee is more vulnerable to the changes in the oil prices.
“The volatility in crude prices is largely being driven by sentiment. With Iraq and Syria forces still far away from the major oil fields that account for 75 per cent of Iraqi oil and US navy ships already training their guns in the Persian Gulf, we are hopeful this situation can be contained before these supplies are impacted. We feel that the Indian rupee would soon stabilise,” said Debopam Chaudhuri, chief economist, ZyFin.
