Lower oil prices give a lifeline to currency market


Lower oil prices give a lifeline to currency market

The rupee has made a strong comeback in the past two months after being one of the worst hit currencies in Asia in 2018. After depreciating around 14% (64 to 74.5) from the beginning of the year, its trading below 70 against the US dollar now.

Sensitivity to oil has been always very high to India’s external account and 2018 was no exception. With oil being at $85 the current account deficit (CAD) was threatening to exceed 3% of GDP impacting the macroeconomic stability of the country.

Lower oil prices have a lot of inter-linkages for our markets. Since the beginning of the year, the FPI’s, after withdrawing more than $12 billion and finally have returned buying around $2 billion in equities and debt.  Read More

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