JOIN USAramco attack effect: Rupee tanks as Brent crude soars
The Indian Rupee on Monday opened 70 paise lower than its previous close as global oil prices soared after attacks on the Aramco’s installations.
The domestic currency opened 70 paise lower in the Interbank Forex Markets at 71.62 against the greenback, breaking its six-day long streak of gains. The rupee had closed at 70.92 on Friday, as softening crude oil prices and easing US-China trade tensions bolstered investor sentiment.
At the time of filing this copy the rupee was trading at 71.48 against US dollar, down 56 paise.
Traders said that soaring crude oil prices, after attack on the Aramco’s facilities, has led to a stronger dollar.
Meanwhile the crude oil prices have seen a huge spike in the global markets. At the time of filing this copy, the benchmark Brent crude was trading at 66.15, almost 10% up from its previous close. The gulf kingdom, which contributes 10% to the global oil output, has produced around 9.9 million barrels of oil every day in 2019, on an average. As a result of the attack by the Houthi rebels of Yemen, seen as the worst attack on country's oil infrastructure since Iraq’s Saddam Hussein fired Scud missiles into the kingdom during the first Gulf War, the country has decided to shut down almost 60% (5.7 million barrels) of its oil production.
The country contributed 19.5% of the total 207.3 million tonnes of crude oil that India imported in 2018-19. The number is expected to have increased after the US sanctions on Iran tightened.
The cut in the supply of oil will result in the stronger dollar globally, as the price of crude oil, traded across the world in US dollars will shoot up. On Friday's close, benchmark Brent Crude traded at $60.52 a barrel, and has been on an upward trajectory in the recent past.