The rupee declined by nearly 120 paise against the dollar over the last three trading sessions — from 68.42 on April 3 to close at 69.67 on Monday — which has been in line with the rise in global oil prices.
The rupee on Monday closed at 69.67 against the dollar, a fall of 45 paise, or 0.65%, from the previous close of 69.22, primarily due to a constant increase in crude oil prices. The rupee closed at the lowest levels against the greenback since March 12. The rupee declined by nearly 120 paise against the dollar over the last three trading sessions — from 68.42 on April 3 to close at 69.67 on Monday — which has been in line with the rise in global oil prices.
Brent oil prices on Monday traded $70.7 per barrel (bbl), the highest level in the past five months. “The fall in the rupee is a late reaction to the fall in global crude oil markets and the populist manifesto of the current government has added to the volatility,” said MV Srinivasan, vice-president, Mecklai Financial. “We can expect the rupee to weaker further.”
The Indian bond and rupee markets could be facing a bearish sentiment on account of rising crude oil prices amid growing concerns of over supply from the Organization of Petroleum Exporting Countries (Opec) and sanctions by the US on oil producing nations such as Venezuela and Libya. “Due to the added pressure on the fiscal deficit on account of Brent crude prices crossing $70 bbl, the bond and rupee markets might face some bearish sentiments,” said Ashutosh Khajuria, vice-president, Federal Bank.
The most traded bond – 7.17% yielding paper maturing in 2028 – closed Monday’s session at 7.55%, 4 basis points higher than the previous close. Foreign portfolio investors (FPIs) have pulled out close to $842 million from the Indian debt markets as on April 5, while they invested close to $14 million in Indian equities.
The dollar index – that measures the dollar against six currencies – fell by 0.4% to 97.03 from the previous close on Friday. FPIs were sellers for four consecutive sessions in the debt market, according to depository data. The Indian rupee fell the most on Monday after the Turkish lira and the South Korean won, which fell 0.8% from its previous close.