Mumbai: India’s rupee had its biggest weekly loss in a decade as record high crude oil prices spurred demand for dollars from refiners and global funds sold local shares.
The rupee is the second worst performer this year among Asia’s 11 most traded currencies as a 31% jump in its value raised concerns that import costs will rise and widen the nation’s current account deficit. Central bank governor Yaga Venugopal Reddy said on Thursday that the rupee’s slide reflects “uncertainties in the global financial markets”. The rupee’s decline “is a symptom of a widening current account deficit”, said Sudhir Joshi, treasurer at HDFC Bank Ltd in Mumbai. “It isn’t likely to see a respite this quarter.”
The currency fell 2.3% this week to close at 41.60 per dollar on Friday. That was its biggest weekly decline since May 1998. India’s imports in the year to 31 March rose 27% to $236 billion (Rs9.7 trillion today), widening the trade deficit to $80.4 billion, the government said on 1 May. The rupee’s slump eroded last year’s 12.3% gain, the most in more than three decades.