Crude oil prices need to drop by $5 a barrel for petrol and diesel prices to revert to the August 1 level as the rupee exchange rate is expected to hover around the current level of 72 against the greenback, oil company executives and forex dealers said.
The rupee’s fall against the US dollar since August 1 accounts for about Rs 2.50 of the rise in pump prices of petrol and diesel, oil company executives said. At the same time, forex dealers said they did not expect the rupee to bounce back in a major way.
Since the government has ruled out a reduction in excise duty, the only way pump prices can revert to the August 1 level is for crude to fall or states to cut VAT by Rs 2.50 or so to negate the impact of a weaker rupee. Read more