Indian rupee has fifth week of losses on rising crude oil costs

Filed on May 24, 2008

MUMBAI India's rupee declined for the fifth week, the worst run in almost two years, as record crude oil costs spurred demand for dollars needed to buy the commodity.

The local currency fell to the lowest since April 2007 this week as companies such as Indian Oil Corporation, the nation's largest refiner, paid more for raw materials. Higher oil costs may slow growth of Asia's third-largest economy, which depends on imports to meet three-quarters of its annual energy needs.

"The pressure on the rupee continues because refiners are looking to cover dollar needs arising in the short term," said Rohan Lasrado, a foreign-exchange trader at HDFC Bank Ltd. in Mumbai. "Adding to the rupee's worries will be the inconsistent dollar supply."

The rupee declined 0.5 per cent this week to 42.705 versus the dollar at the 5pm close in Mumbai, according to data compiled by Bloomberg. It may fall to 43.25 in next few days, Lasrado said.

The rupee is the second-worst performer this year among Asia's 10 most-traded currencies, excluding the yen.

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