Business | Economy
Indian rupee decline 'reflects uncertain markets'
India's rupee fell to the lowest level in almost 13 months as crude oil traded near an all-time high, boosting demand for dollars from importers to buy the commodity.
- Bloomberg
- Published: 00:43 May 9, 2008
Mumbai: India's rupee fell to the lowest level in almost 13 months as crude oil traded near an all-time high, boosting demand for dollars from importers to buy the commodity.
The local currency completed its biggest three-day loss in more than 12 years on speculation refiners including Indian Oil, the nation's biggest, increased purchases of dollars after oil prices jumped 10 per cent in the past week.
The rupee declined 0.9 per cent to 41.7375 per dollar in Mumbai, the lowest close since April 20, 2007, according to data compiled by Bloomberg.
It dropped 2.7 per cent this week, the most in a five-day period since November 1997.
"The sudden spurt in oil prices caught importers, particularly refiners, off guard and led to this unprecedented demand for dollars,'' K.V. Mallik, treasurer at state-owned UCO Bank in Kolkata. "The rupee will now be under pressure.''
The currency may fall to 42 in coming days, Mallik said.
Crude for June delivery yesterday touched $123.93 a barrel on the New York Mercantile Exchange, the highest since trading began in 1983. Prices have almost doubled in the past year.
The rupee slumped 5.7 per cent this year, making it the second-worst performer among Asia's 10 most-traded currencies excluding the yen.
It pared last year's 12.3 per cent gain, the most in more than three decades, as slowing capital inflows and rising oil import costs threaten to widen the nation's current-account deficit.
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