Crude oil surge drags rupee at 1-month low. Experts see more dip


INR vs USD: On account of soaring crude oil prices fueling global inflation and India’s Dollar outgo on oil imports, Indian National Rupee (INR) has hit one month low against the US Dollar (USD) at Forex market. According to experts, Indian Rupee is at one month low in both spot and future markets quoting 74.32 and 74.76 per Dollar respectively. Currency experts went on to add that recent Fed’s announcement in regard to bond tapering has lifted US Dollar to near one year high and it is also not allowing any relief to the Indian national currency. They said that by end of October 2021, Indian rupee may go down up to 75.50 per dollar levels.

Speaking on INR to USD deviation; Anuj Gupta, Vice President — Commodity & Currency Trade at IIFL Securities said, “Soaring crude oil price is the major reason for Indian Rupee’s dip against US Dollar. Due to rise in crude oil prices, India’s Dollar outgo on oil imports has gone up leading to rise in pressure on national Current Account Deficit (CAD). Apart from this, recent Fed’s announcement in regard to bond tapering has lifted US Dollar to near one year high. It is also one of the major reasons for Rupee falling against the US Dollar.”

Echoing with Anuj Gupta’s views; Anindya Banerjee, Deputy Vice President — Currency Derivatives & Interest Rate Derivatives at Kotak Securities said, “US Dollar Index is almost at a 1-year high and crude oil prices are at a near 3-year high, with US bond yields rising on Fed taper and rising inflation expectation. This combination should have knocked USDINR out of the park but that is not what is happening due to structurally positive factors for the Rupee — European major currencies are doing well against USD, privatisation drive of GoI (Government of India) is boosting sentiments, Dollar inflows related to IPO.”

Expecting rupee to remain weak against the US Dollar; Anuj Gupta of IIFL Securities said, “Indian Rupee may go down up to 75.50 per US dollar levels by end of October 2021 as crude oil prices doesn’t seem cooling down in near future.”

Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint.

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