Rupee Likely To Test 88-Level Against US Dollar Amid Middle East Tension
About 20 per cent of the world's daily oil consumption-approximately 20 million barrels per day-passes through the Strait of Hormuz, along with significant volumes of liquefied natural gas (LNG). For India, which relies on imports for over 80 per cent of its crude oil needs such volatility is damaging: US Energy Information Administration (EIA)
MUMBAI: Iran’s move to block the Strait of Hormuz after the United States bombed its three nuclear sites could significantly impact global oil prices and trigger a rush to the safe haven dollar. The rupee could open at 87 levels to the dollar on Monday and experts anticipate it to fall further to 88 levels in the coming weeks.
Anil Bhansali, head of treasury at Finrex Treasury Advisors said, “With Iran closing the Strait of Hormuz, the traffic will now have to go through the Cape of Good Hope and South Africa which is going to be very costly. Oil may cross $ 80 per barrel and could even move $ 100 per barrel. So, we could see the rupee slowly moving towards 88 but it will obviously not stay there for too long as peace initiatives will prevail.”
“But for tomorrow, we expect the rupee to open at 87 and in the coming weeks, we could see it even going towards 88.”
The rupee has declined by 1.75 per cent from Rs 85.35 to Rs 86.84 per US dollar between June 2 and 19. Oil prices have already risen by around 20 per cent this month to $ 77 levels with the market
anticipating another spike in prices with the US having stepped into the Middle East conflict.
Jamal Mecklai, chief executive officer at Mecklai Financial Services said, “Probably there will be pressure on the rupee. Market will remain volatile. The low level we saw was 88 so the rupee could go in that direction but I don’t expect it to stay there for long.”
According to the US Energy Information Administration (EIA), about 20 per cent of the world's daily oil consumption-approximately 20 million barrels per day-passes through the Strait of Hormuz, along with significant volumes of liquefied natural gas (LNG). For India, which relies on imports for over 80 per cent of its crude oil needs such volatility is damaging. The situation is further compounded by the
rupee’s depreciation.
