Mumbai, April 25 (IANS) Brent crude, the global oil benchmark, crossed $75 a barrel mark on Thursday, its highest level in over six months after the US said it would end sanctions waivers that have allowed oil importing countries to keep buying Iranian crude.
“If oil remains at current levels, then rupee is likely to depreciate towards 71 to a dollar. This would also put pressure on the current account deficit that had eased due to stronger rupee earlier,” said Vaqar Javed Khan, Research Associate, Angel Broking.
Khan also mentioned that India might have seen that the end of sanctions waivers was on cards and would have prepared adequately. The rupee was stronger against the dollar during the past months, so we may not see a huge setback to the currency.
A Care Rating report recently noted the impact of higher crude oil on the rupee saying that “the (Indian) currency will be the first point of contact as the trade deficit and current account deficit will widen” since India imports over 80 per cent of its oil requirements.
“The sharp increase in import bill will hence tend to put pressure on the rupee,” the report said.
It also noted that the rupee will be under pressure and a sustained increase in oil price in the range of $70-75 per barrel or higher can move the rupee down by 3-4 per cent on an annual basis, given that the dollar has already started strengthening in the world market.