Rupee goes from first to last amid Kashmir tensions
MUMBAI: India’s rupee has gone from being the best-performing Asian currency last quarter to the worst this year as rising crude prices and tensions over Kashmir weigh on sentiment.
The currency has slumped 2.4% since the end of December, missing the rally in its regional peers on optimism over Us-china trade talks. It slid to ₹71.515 per dollar on Monday, from as strong as ₹69.23 in early January, and traded at ₹71.4450 at 3.15pm in Mumbai. The S&P BSE Sensex index of stocks extended its biggest weekly loss in four months.
“The risk for the India story, which is keeping the dollar well bid vis-a-vis rupee, is higher oil, followed by Kashmir tensions and the political uncertainty,” said Ashish Vaidya, head of trading at DBS Bank in Mumbai. “If the negative factors are sustained, for instance, if the Kashmir situation worsens, the rupee could soon touch 73.” Losses in Indian assets have deepened since Thursday when a suicide bomber rammed his explosive-laden vehicle into a bus ferrying security forces— the worst attack in Kashmir in decades. Jaish-e-mohammad, a Pakistan-based terror group, claimed responsibility for the assault. Pakistan’s foreign ministry denied any role and said it always condemned acts of violence.
Crude oil has surged more than 20% this year as Saudi Arabia and Russia pledged to expand their output cuts and on concern US sanctions against Venezuela and Iran will exacerbate a tightening of supply.