Rupee falls for fourth day; at 13-month low

Rupee falls for fourth day; at 13-month low
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First Published: Thu, May 15 2008. 10 16 PM IST
Updated: Thu, May 15 2008. 10 16 PM IST
The rupee fell to a 13-month low on concerns that near-record oil prices will boost the nation’s import bill, widening the trade and current-account deficits.
The currency declined for a fourth day on speculation local refiners increased purchases of foreign currency required to pay for crude oil imports after the commodity in New York rose to an all-time high $126.98 per barrel this week. India depends on shipments from abroad to meet three-quarters of its energy needs.
“The rupee’s persistent weakness is mainly due to the rally in energy prices and consequent worries about the trade and current-account deficits,” said Parthasarathi Mukherjee, treasurer at Axis Bank Ltd in Mumbai. “The rupee may remain under pressure as long as the uncertainty on oil continues.”
The rupee weakened 0.6% to 42.705 versus the dollar at the 5pm close in Mumbai, according to data compiled by Bloomberg. The currency’s 7.4% loss this year is the third-worst performance among the 10 most-traded Asian currencies after the South Korean won and the Thai baht.
The rupee has fallen 8.7% in the past six months as oil prices advanced 34%.
India’s trade deficit widened to an all-time high of $25.4 billion in the three months through December, according to the central bank. The current-account shortfall, a measure of trade and investment flows, increased to $5.4 billion in the same quarter from $4.7 billion.
The rupee rose earlier on speculation that exporters purchased the currency as it headed for a fourth straight weekly loss.
Bloomberg
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First Published: Thu, May 15 2008. 10 16 PM IST