Rupee Plunges Once More This Week on Rising Oil Prices


Rupee Plunges Once More This Week on Rising Oil PricesThe Indian rupee declined once again for the fourth week, the lengthiest drop since April over fears that the rising oil prices may negatively affect inflation and increase trade deficit.

The rupee fell 0.2 percent on Friday to trade at 60.1875 per dollar, bringing its total decline this week to 0.7 percent. The rupee had earlier touched 60.54, its lowest level since April 29.

Brent crude prices rose to $115.71 a barrel on Thursday, the most since September after the ongoing violence in Iraq spurred speculation that oil supplies might be affected. India’s trade deficit rose to $11.2 billion, the widest in 10 months while wholesale-price inflation grew 6.01 percent, the most so far this year.

“The rupee remains hostage to the geopolitical tensions in the Middle East,” said Anindya Banerjee, a Mumbai-based currency analyst at Kotak Securities Ltd told Bloomberg. “It’s expected to remain volatile in the near term.”


The rupee’s one-month implied volatility, which measures the expected shifts in the exchange rate used to assign price to options, rose 0.76 percentage point, or 76 basis points to 7.71 percent this week. This is the strongest showing since the week through April 18.

The rupee’s 3-month offshore non-deliverable forwards declined 0.3 percent in Friday, bringing the total weekly decline to 61.07 per dollar.

The Canadian dollar also rose to its strongest level since January after inflation increased way past the central bank’s target in May.

The Canadian currency surged 0.6 percent to C$1.0754 for each U.S. dollar by 3:43 p.m. in Toronto. The currency rose to C$1.0752, its highest level since January 7, bringing its total weekly gain to 0.9 percent. To register for a free 2-week subscription to ForexMinute Premium Plan, visit

To contact the reporter of this story; Yashu Gola at