Indian Rupee plunged in the third quarter of the current fiscal and reached to 71.51 against US Dollar. This plunge is seen as a aftermath of recent terror attack in Pulwama and the rising crude oil prices. The Rupee was a notch stronger in January with 69.23 against Dollar.
Another major reason behind this could be the upcoming general elections, only a few days are left in the General Elections 2019 and till the new regime comes into power, the uncertainty over fuel prices are likely to prevail. The currency has plunged about 2.4% since the end of the last quarter and is expected to fall more if the crude oil prices keep on rising.
“The risk for the India story, which is keeping the dollar well bid vis-a-vis the 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.”
The situation could get more worse as US president Donald Trump has imposed several restrictions on the oil exports by Venezuela. Also, India’s biggest Crude oil supplier Iran has exacerbated a tightening of supply.