Oil Spike Sends India Rupee Tumbling to One-Month Low
(Bloomberg) -- India’s rupee weakened to the lowest level in more than a month and bonds fell as a jump in oil prices once again exposed the nation’s vulnerability to spikes in energy costs.
The currency slid as much as 0.8 percent to 69.8775 per dollar at 9:35 a.m. in Mumbai, set for the lowest level since March 11, while the yield on most-traded bonds due in 2028 surged six basis points to 7.62 percent. The S&P BSE Sensex index of equities lost 0.6 percent.
“The surge in oil prices is the primary reason that is weighing on all asset classes,” said Harish Agarwal, Mumbai-based trader at FirstRand Bank Ltd. Elevated crude prices widen the country’s current-account deficit and stoke inflation, which muddies the outlook on interest rates, he said.
Brent prices surged as much as 3.2 percent to 74.31 a barrel, the highest since Oct. 31, as the U.S. government was said to eliminate sanction waivers that allowed buyers to import Iranian crude. Iran is India’s third-biggest oil supplier and any sanctions can bump up the import bill significantly for a country that relies on overseas purchases to meet about 80 percent of its energy requirement.
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