Oil weighs on the Rupee

Geeta Parthip
06 August 2004

Rupee at 46.41 opened lower than yesterday's closing of 46.37. This weakening of the rupee is attributed to the sudden rise in dollar demand by the large oil companies.

Crude oil prices went up to 44.73 dollars a barrel due to acute supply constraints hitting an all time high. This was despite the recent reports from the OPEC informing that they have been able to identify untapped resources recently and also the US declaring ample excess stock of gasoline.

Yesterday, oil prices found some respite when the Russian government informed Yukos, the second-largest Russian oil company that they could use cash in their accounts to pay suppliers.

Today, they recalled those orders and instead froze Yukos' bank accounts. The fear that Yukos may be forced to halt all oil exports because of a lack of funds to pay for delivery costs has sent oil prices soaring to record highs in New York. Tight supply is already a big concern in the oil markets and today's report only further escalates that concern.

The international currency markets await the US non-farm payrolls to get the dollar rolling.

The labour market reports have confused the market for now as to the data.