Mumbai: The rupee on Tuesday slid further 47 paise to settle at a record low of 72.98 against the US currency due to surging crude oil prices and escalating trade war worries.
Panic dollar demand from importers and speculative traders sent the home currency sinking to a historic low of 72.99 in late afternoon deals with very little chance of RBI intervention.
A sharp spike in international crude oil prices weighed on the trading front towards the tail-end session even as the US dollar fell to seven-week lows after Donald Trump announced fresh 10 per cent tariffs on Chinese imports.
US President Donald Trump on Monday night announced to impose additional 10 per cent duties on Chinese imports worth $200 billion.
Benchmark Brent crude futures were up $1.14 a barrel to $79.19 a barrel, after hitting a high of $79.37 in early Asian trade. Since Monday, the rupee has plunged by 114 paise or more than 1.5 per cent as trade war concerns resurfaced and crude oil rebounded.
The stubbornly high global crude oil prices are opening up a can of worms to heightened inflation risks and likely to disrupt government's fiscal maths along with deteriorating global financial conditions.
Considering that India is a net importer of crude oil, the impact of this imported inflation is expected to be significant.
Meanwhile, India sees rupee value of 72-73 against the dollar as “fair value,” a senior finance ministry source said to Reuters on Tuesday, after the government announced a raft of measures last week to stabilise the falling local currency.
“Rupee could again come under pressure once the new US sanctions on Iran comes into force,” due to a possible rise in oil prices, the source who declined to be named told Reuters.
Iran’s oil exports have been falling in recent months as more buyers, including its second-largest buyer India, cut imports ahead of US sanctions that take effect in November. US aims to cut Iran’s oil exports down to zero to force Tehran to re-negotiate a nuclear deal.
