The Indian Rupee was weaker against the Pound on Monday and was close to reaching its lowest level in seven weeks against the US Dollar as concerns over rising oil prices and increased demand for Dollars weighed.
The fighting in Iraq sent oil prices climbing last week which in turn increased concerns that the higher cost of the commodity would have a negative impact upon India’s trade deficit and have a knock on effect upon inflation.
As India imports around 80% of its oil any rise in prices has a negative effect upon the nation’s trade deficit data.
“The currency is likely to be volatile given the concerns emerging out of Iraq. The Rupee is likely to be under pressure given that India is a net importer of oil,” said the co-head of currency and strategy at Edelweiss Financial Services Ltd.
As the financial year comes to a close the Indian Rupee was also weakened by an increased demand for US Dollars from Indian importers.
“Dollar demand from importers hurt the Rupee today, but the market will continue to be rangy until the budget. The Rupee is likely to remain in a broad range until then,” said the head of foreign exchange trading at HDFC Bank.
The Rupee is likely to remain under pressure from increased US Dollar demand and is likely to see range bound trading until the budget for the year ahead. The government is due to present the federal budget on July 10th.
If the situation in Iraq continues to deteriorate and oil prices rise we are likely to see the Rupee fall further against the Pound and of course the US Dollar.
Indian Rupee (INR) Exchange Rates
[table width=”100%” colwidth=”50|50|50|50|50″ colalign=”left|left|left|left|left”]
Currency, ,Currency,Rate ,
Euro,
,Indian Rupee,81.7755 ,
Pound Sterling,, Indian Rupee,102.2900 ,
US Dollar,, Indian Rupee,60.1600 ,
Australian Dollar,, Indian Rupee,56.7549 ,
[/table]
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