The rupee and the government securities markets on Monday felt the impact of rising crude oil prices due to the ongoing West Asia conflict. The rupee opened weaker, well above 92 level and G-Sec yields hardened by about 6-7 basis points.
The Indian currency opened about 49 paise weaker at 92.2250 per US Dollar and is currently trading at 92.32, per CCIL data. The Rupee closed last Fridat at 91.74 per US Dollar, down 77 paise as compared with the previous Friday’s close of 90.97.
Brent crude oil price has jumped about 24 per cent to $108 per barrel in trading so far today.
Amit Pabari, MD, CR Forex Advisors, observed that the biggest economic impact of the conflict is being felt through energy markets.
“Oil and gas prices have risen sharply as traders worry about supply disruptions in the West Asia.
Higher energy prices quickly translate into inflation concerns across the world. Markets are recalibrating their expectations for U.S. interest rates. With fewer anticipated rate cuts, the US dollar gains strength — adding further pressure on the rupee,” he said.
Pabari underscored that recent data from the United States also suggests that the economy remains resilient. This steady economic backdrop reduces the urgency for the Federal Reserve to cut rates, giving further support to the dollar.
“Technically the 91.20–91.50 zone is emerging as strong support for USD/INR. On the upside, the pair remains vulnerable. A gradual move toward the 92.30 – 92.50 region could still be seen as global risks and oil prices remain elevated,” he said.
G-Sec yields harden
Yields of G-Secs rose as market players factored in the inflationary effect of high crude oil prices and a depreciating Rupee.
Yield of the benchmark 10-year G-Sec (6.48 per cent GS 2035) is currently trading at 6.76 per cent, up 7 basis points from previous close of 6.69 per cent.