BackRupee falls to four-week low as oil prices surge
The rupee ended down 0.87% on Friday after international oil prices surged to nine-month highs on concerns regarding violence in Iraq
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Mumbai: The rupee on Friday weakened to a four week low against the US dollar after international oil prices surged to nine-month highs to near $115 a barrel amid concerns that escalating violence in Iraq could disrupt oil supplies.
The rupee ended at 59.77, down 0.87%, from last close. This is the biggest daily loss for the currency since 24 January. The local unit opened at 59.31 against its Thursday’s close of 59.26 and touched a low of 59.80—a level last seen on 13 May.
“The rise in crude oil prices due to tensions in Iraq is weighing on the rupee," said Vikas Babu, a Mumbai-based foreign-exchange trader at Andhra Bank.
Since the beginning of this year, the rupee has gained 3.39%, while foreign institutional investors have bought $9.31 billion during the period from local equity markets.
India’s benchmark index, Sensex, ended at 25228.17 points on BSE, down 1.36%.
The yield on India’s 10-year benchmark bond ended at 8.593%, compared with its Thursday’s close of 8.55%. Bond yields and prices move in opposite directions.
The dollar index, which measures the US currency’s strength against major currencies, was trading at 80.659, up 0.10% from the previous close of 80.576.
Traders are awaiting the Wholesale Price Index (WPI) data for the month of May due on 16 June for more cues. Bloomberg estimates that WPI will be 5.3% for May as compared with 5.2% in April.
India’s factory output grew at the fastest pace in 13 months, rising to 3.4% in April, higher than estimated and better than the 0.5% decline in March, while Inflation measured by consumer price index eased to 8.3% in May from 8.6% in April as vegetable prices cooled.
Bloomberg contributed to this story.
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