A falling rupee and unstable oil prices may threaten recent robust growth, hitting trade in particular
AN unsteady rupee together with continuing volatility in crude oil prices in the wake of US sanctions against Iran and Russia have become a major cause of worry for India. The downward slide of the rupee over the last several weeks was triggered by the US Treasury Department’s move on April 16 when it put India—for the first time—on a list of countries being monitored for possible currency manipulation. In addition, US President Donald Trump’s protection ist moves have not helped India. The country is yet to work out how to minimise the impact on consumers as crude oil prices hover over $75 per barrel and the rupee sliding to more than 67 rupees to the dollar. For India, which dep ends on imports for over 75 per cent of its crude oil demand, a weak rupee is a big drawback as it threatens to undo the last quarter’s robust economic growth. A major concern for policymakers is, will global oil prices scale over $80 per barrel in the near future, as witnessed recently before the slide to $75 levels?
With the Reserve Bank of India (RBI) stepping in, the rupee slide has been stemmed for now at below Rs 68/dollar. Despite this, the question—worrying importers in particular—is whether the rupee will fall further. “We look for a range of Rs 66.50–Rs 69.50 for the next three months, with a weakening bias for rupees. Further on, the rupee’s movement will depend a lot on the crude oil price,” says Vikram Murarka, chief currency strategist, Kshitij Consultancy Services. He clarifies that contrary to popular perception, crude oil strength or weakness doesn’t translate to longterm rupee weakness or strength.
This story is from the June 18, 2018 edition of Outlook.
Start your 7-day Magzter GOLD free trial to access thousands of curated premium stories, and 8,500+ magazines and newspapers.
Already a subscriber ? Sign In
This story is from the June 18, 2018 edition of Outlook.
Start your 7-day Magzter GOLD free trial to access thousands of curated premium stories, and 8,500+ magazines and newspapers.
Already a subscriber? Sign In
Voters' Cold Wave
Heat wave, voter apathy and cyclic migration are blamed for the poor voter turnout in Bihar. Political parties are clueless about what impact will it have on election results
Occupy Ivy League
Students protesting in American universities are asking the US government to rethink its policy towards Israel
Left Side Story
Personal attacks, lower voter turnout and the BJP’s determined campaigning: how has Kerala voted this time?
Across the Pir Panjals
The newly carved-out constituency of Anantnag-Rajouri is set to witness a very close contest
Gashes in the Red Sand
Residents of the tribal district of Gadchiroli resist development models that destroy the environment
When Taps and Hope Run Dry
Peaking water scarcity and pervasive groundwater contamination have increased migration from many districts of Rajasthan.
Pilgrim's Politics
Two-time MP from Varanasi, Narendra Modi, is sculpting the eternal city in his image
Under The Model Town
Muslim ghettos in Ahmedabad are dilapidated and neglected
The Master Strategist
The Assam chief minister enjoys popularity both as an administrator and a politician despite his relentless anti-Muslim rhetoric
Missing in the Margins
The Katkari community in Raigad district has been facing issues like cyclic migration, no rights over forest land, and a dearth of basic facilities. But these concerns don’t find mention in the high-pitched political debates