Oil puts rupee on course to outstrip taper-tantrum losses

Oil puts rupee on course to outstrip taper-tantrum losses

Move over taper tantrum. The Indian rupee looks set to outpace losses seen in 2013 as efforts by policy makers to stem its rout fall flat in the face of rising oil prices and relentless foreign outflows.

Down 13 percent as Asia’s worst currency in 2018, predictions that crude — India’s biggest import — could return to $100 per barrel signal that things may get a lot worse for the rupee in the final three months of the year. Back in 2013, the currency had rallied in the October-December period following a two-quarter plunge of more than 13 percent on indications the Federal Reserve would wind back stimulus.

“It’s pretty difficult to see a huge turnaround in the rupee,” said Khoon Goh, the head of research at Australia and New Zealand Banking Group Ltd. in Singapore. The underlying causes for the rupee’s weakness — higher oil and foreign outflows due to higher U.S. rates — will still remain, he said.

The rupee has been setting one record low after another recently and slipped to an unprecedented 73.4150 per dollar on Wednesday. Strategists have been playing catch up as losses accelerate, with the median year-end estimate for the currency moving to 72 per dollar from 69 at the end of August. Read More

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