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Rising oil prices, stronger dollar take rupee to new lows

With oil prices rising to levels of $86 per barrel and the dollar strengthening, the rupee drifted down new lows on Thursday of 73.58 to the dollar.

oil prices, us dollar, dollar value, rupee, rupee value, Foreign portfolio investors, Foreign portfolio investment
Foreign portfolio investors (FPI) have been offloading equities and have sold close to $5 billion worth of stocks since April. (Reuters)
oil prices, us dollar, dollar value, rupee, rupee value, Foreign portfolio investors, Foreign portfolio investment
Foreign portfolio investors (FPI) have been offloading equities and have sold close to $5 billion worth of stocks since April. (Reuters)

With oil prices rising to levels of $86 per barrel and the dollar strengthening, the rupee drifted down new lows on Thursday of 73.58 to the dollar. Spooked by the fast deteriorating macro-environment, stocks crashed — the Sensex plummeted 806.47 points to end the session at 35,169.16. Foreign portfolio investors (FPI) have been offloading equities and have sold close to $5 billion worth of stocks since April.

oil prices, us dollar, dollar value, rupee, rupee value, Foreign portfolio investors, Foreign portfolio investment

Even as treasury yields in the US hit their highest levels in seven years, the Indian benchmark yield rose 5 basis points to 8.16%. Yields have gone up sharply at the shorter end too over the past several sessions, rising by about 15-120 basis points. This is despite the fact that the central bank has assured the market of liquidity support.

The bond markets are pricing in a hike in the repo rate of 25 basis points on Friday when the central banks reviews monetary policy.

With importers rushing to cover, the premium on three-month forward contracts jumped to levels of 4.61%, around11 basis points (bps) over Wednesday’s close. The rupee weakened despite the Reserve Bank of India making foreign currency borrowing norms easier for oil marketing companies.

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