Rupee below 70/$, oil at $75/bbl bring inflation fears back

Rupee below 70/$, oil at $75/bbl bring inflation fears back

Rising oil prices kept the pressure on the rupee, which slipped 39 paise on Thursday to end at Rs 70.26 to the dollar, a level seen nearly four weeks back. Brent crude hit six month high of $75 a barrel, following the US government’s decision to impose sanctions on countries importing from Iran from May 2.

This is a departure from the current position where it had given exemption to countries including India. The rupee had opened at Rs 70.02 against the dollar and touched a low of Rs 70.26 against the dollar as the oil prices continued to play spoilsport.

With rupee on slippery ground inflation is back in focus. Doubts about a normal monsoon and the rise in oil prices is likely to force Reserve Bank of India to revise its projections in the next policy review in June.

With benign food prices for close to a year, the central bank had cut its retail inflation forecast to 2.9-3% for the first half of the current fiscal in April, when it unveiled the first monetary policy of the fiscal. Read More

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