Rupee tumbles 71 paise against US dollar in early trade as oil prices soar

Rupee tumbles 71 paise against US dollar in early trade as oil prices soar

The domestic unit on Friday marched higher for the seventh straight session to close at 70.92, up 22 paise. SI Reporter  |  New Delhi 

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The domestic unit on Friday marched higher for the seventh straight session to close at 70.92, up 22 paise.

SI Reporter  |  New Delhi 

Following a sharp surge in the crude oil prices, the rupee on Monday opened 71 paise lower at 71.62 against the US dollar. However, the currency retreated later and was trading at 71.46 at the time of writing this report.

The domestic unit on Friday marched higher for the seventh straight session to close at 70.92, up 22 paise.

The currency has appreciated by 147 paise in the last seven trading sessions. On a weekly basis, the local unit has gained 82 paise.

However, attacks on two plants at the heart of the kingdom’s oil industry on Saturday that knocked out more than half of Saudi crude output, or 5 per cent of global supply, are likely to keep rupee under pressure.

Crude prices would spike by at least $15-20 per barrel in a seven-day disruption scenario and go well into triple digits in a 30-day scenario, Bloomberg reported quoting Bob McNally of Rapidan Energy as saying. “This does not include what are likely to be large (if difficult to model or predict) premia to reflect zeroing out of global spare production capacity amidst ongoing disruption risks, hoarding, and panic sentiment,” McNally added. READ MORE

Christyan Malek, an analyst with JPMorgan expects a $3-$5 move in oil prices in the short term. “This attack introduces a new, irreversible risk premium into the market, Malek said. The analyst expects oil to rise to $80-90 a barrel over the next three-six months as the market turns its focus to geopolitics.

Back home, foreign institutional investors (FIIs), who were net buyers for the past few sessions, offloaded shares worth Rs 405.45 crore on Friday, according to provisional exchange data.

In the equities market, Asian shares were trading mixed in the morning trade on Monday. MSCI’s broadest index of Asia-Pacific shares outside Japan was a tick lower at 515.4. Australian shares were down 0.1% while South Korea’s KOSPI was a tad higher. E-Minis for the S&P 500 were off 0.4 per cent while those for the Dow eased 0.3 per cent. Among major currencies, the yen was up 0.4 per cent to 107.64 per dollar while the Canadian dollar rose 0.5 per cent in anticipation of higher oil prices, Reuters reported.

First Published: Mon, September 16 2019. 09:20 IST

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