The rupee fell as stocks slumped and crude oil at a record high added to speculation refiners will need to buy more dollars to pay for imports.
The rupee weakened 0.2% to 40.425 per dollar. It may fall to 40.75 in the next week,
Analysts are mostly of the view that rupee would be within the range of 40-40.50 levels or even touch 40.75 levels against dollar in the short term, say for the next two months.
?Having already allowed a large appreciation of 10.2% over the last 12 months, we believe that in the next 3-4 months the RBI is likely keep the rupee in a narrow band of 39 to 40.25,? said Chetan Ahya and Tanvee Gupta from Morgan Stanley in a research report.
The rupee ended three days of gains as crude oil in New York touched $110.70 a barrel today.
Asia’s third-biggest economy, which meets three-quarters of its energy needs from abroad, needs to pay more as the commodity climbed almost 15% this year following a 57% rise in 2007. The currency also weakened on concern global funds will reduce their equity holdings after the benchmark index had its fifth worst day this year.
”The oil price increase is very sensitive and, given its importance, can spur dollar demand very quickly,” said Puneet Sharma, chief currency trader at state-owned Allahabad Bank in Mumbai. ”That should keep the rupee under pressure now,” Sharma said.
India’s monthly oil imports climbed to a record $7.7 billion in January, the commerce ministry said March 3.