Oil prices hit multi-year highs buoyed by recovering demand
|The USDINR pair made a flat opening at 75.26 levels and traded in the range of 75.25-75.38 with an upside bias. The pair finally closed at 75.34 levels. The Reserve Bank of India set the reference rate at 75.3434 levels. The Indian rupee fell slightly against the dollar today because a sharp rise in US Treasury yields and crude oil prices weighed on sentiment for the Indian currency.
High crude oil prices worsen India's current account deficit by increasing the import bill and subsequently weigh on the rupee. Meanwhile, the 10-year US Treasury yields jumped 7 basis points to 1.59% on Friday as retail sales in September grew more than expected, while weekly jobless claims fell to a pandemic-era low, indicating a rebound in the world's largest economy. However, a rise in domestic benchmark indices supported the Indian rupee. On an annualized basis, a premium on the one-year, exact period dollar/rupee contract rose to 4.46% as against 4.41% of the previous close.
China’s economy grew at its slowest pace in a year in the third quarter of 2021, with a global energy crunch, supply chain bottlenecks, and an unsteady property market also adding pressure on policymakers to bolster a faltering economic recovery. The GDP grew 4.9% y-o-y, lower than the 5.2% growth in forecasts and the 7.9% growth recorded in August 2021. Oil prices hit multi-year highs buoyed by recovering demand and high natural gas and coal prices encouraging users to switch to fuel oil and diesel for power generation.
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