Mumbai: The rupee fell to the lowest level in eight months on speculation that India’s refiners will increase dollar purchases to pay for imports of crude oil as prices of the commodity rose to a record.
The currency declined by the most in more than two months as oil prices in New York climbed to an all-time high of $120.93 per barrel, stoking concern a rising import bill will widen India’s trade and current-account deficits. The rupee also dropped on concern that equity losses will prompt overseas funds to slow purchases.
“With crude at $120, oil-related bids are coming in for the dollar. That has kept the rupee under pressure,” said Vikas Babu, a foreign exchange trader at state-owned Andhra Bank in Mumbai.
The rupee weakened 0.8% to 40.945 per dollar at close in Mumbai. It is the lowest close since 4 September and the biggest loss since 3 March.
The currency’s 3.7% loss this year is the second worst performance among the 10 most traded Asian currencies outside Japan, after the South Korean won.
The rupee’s three-month decline through April is its longest losing streak since May 2006. Overseas oil purchases by Asia’s third largest economy climbed to a record $8.6 billion in March as the commodity became costlier, government data show.