Rupee climbs to one-month high as oil boosts deficit optimism

22/12/2015 05:56 AST

India’s rupee climbed to a one-month high on optimism plunging prices of Brent crude will help cut the nation’s current-account deficit.

Goldman Sachs Group Inc. estimates the shortfall in the broadest measure of trade will be 1.1 per cent of gross domestic product in the fiscal year ending March 2016, compared with 1.3 per cent in the previous period, according to a report this month. Australia & New Zealand Banking Group Ltd. and Morgan Stanley are among global banks predicting that the rupee will outperform its Asian peers in 2016.

“Oil prices at multi-year lows will help keep the deficit in check and that is a huge positive for the rupee,” said Gaurav Sharma, a senior currency analyst at Religare Commodities Ltd. in Noida, near New Delhi. “Also, the Federal Reserve’s meeting is now behind us.”

The rupee strengthened for a fifth day, rising 0.1 per cent to 66.3525 a dollar in Mumbai, according to prices from local banks compiled by Bloomberg. It climbed to 66.2625 earlier, the highest level since November 23. The currency has advanced 0.5 per cent in December, paring its decline for 2015 to 5 per cent.

Brent crude slumped to the lowest level since 2004 on Monday, lowering costs for India, which imports about three quarters of its oil.


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