The rupee opened lower in trade today amid brent crude oil prices breaching the $81 per barrel mark ahead of impending US sanctions on Iran.
The Indian currency started 26 paise lower at 72.89 per dollar on negative global cues. On Monday, the rupee rose marginally higher against the US dollar but pared gains in late trade to close 43 paise lower at 72.63 level. Later, the Indian ccurrency weakened to 72.96 against the US dollar Tuesday, hurt by increased demand for the American currency from importers as global crude oil prices hit four-year high.
Brent crude oil prices breached the $81 per barrel for the first time in four years on the back of tightening oil market and OPEC leaders signalling they won't be immediately raising the output. Currently, brent crude price was trading at $81.44 per barrel.
Oil prices jumped after OPEC decided not to produce more oil and gave a boost to shares of oil majors such as Exxon and Chevron. Technology and health care companies also rose.
Concerns about new US tariffs on China weighed on the mood after Beijing walked away from trade talks with the US raising fears of trade war escalation.
Traders said besides sustained demand of the US currency from importers and dollar's strength against some currencies overseas ahead of US Federal Reserve's meet, a lower opening in the domestic equity markets too weighed on the domestic unit.The rupee could come under mounting pressure in coming days as a strong crude oil market is hurting India's macroeconomic stability, which could in turn spur flight of capital, they added.
India is 81 per cent dependent on imports to meet its oil needs and is the third largest importer of crude after US and China. Since payment of crude oil prices is done in dollars, a higher crude rate leads to more amount of rupee being converted to dollar, thereby strengthening the US currency.
Oil prices could rise to $100 a barrel by 2019, warn merchants
Oil prices could rise towards $100 per barrel by 2019 as US sanctions against Iran tighten markets, commodity merchants Trafigura and Mercuria said.
weakened by 33 paise to 72.96 against the US dollar Tuesday, hurt by increased demand for the American currency from importers as global crude oil prices hit four-year high.
The international benchmark Brent crude breached the USD 81 a barrel mark by surging over 3 per cent to trade at USD 81.28 a barrel.
Traders said besides sustained demand of the US currency from importers and dollar's strength against some currencies overseas ahead of US Federal Reserve's meet, a lower opening in the domestic equity markets too weighed on the domestic unit.
On Monday, the local currency had ended sharply lower by 43 paise to 72.63 against the US dollar after crude prices soared ahead of impending US sanctions on Iran.
Meanwhile, on a net basis, foreign funds sold shares worth Rs 523.94 crore, while domestic institutional investors bought shares to the tune of Rs 1,527.67 crore Monday, provisional data showed.
The benchmark BSE Sensex fell 79.02 points, or 0.22 per cent, to 36,226.