India Rupee Drops Against Dollar on Refiners' Demand for Oil

By Anoop Agrawal

Aug. 18 (Bloomberg) -- India's rupee fell for a fifth day, the longest losing streak in more than eight months, on speculation refiners stepped up purchases of crude oil.

Companies including Indian Oil Corp., the nation's biggest refiner, may have purchased the dollar to buy more crude after the oil price on Aug. 15 touched the lowest in more than three months, according to Sudarshan Bhatt, chief currency trader at Corporation Bank. India's markets were closed that day for a holiday.

``Crude oil is still not at levels where Indian refiners can breathe easy and hence dollar demand is persistent,'' Mumbai-based Bhatt said. ``Pressure on the rupee may increase the pace of its decline in the near term.''

The rupee weakened 0.5 percent to 43.29 per dollar as of 10:18 a.m. in Mumbai, from 43.055 on Aug. 14, according to data compiled by Bloomberg. It earlier touched 43.33, the weakest since July 8.

The currency may decline to 44 within a month, Bhatt predicted. The rupee last slid for five days in a row in the period ended Nov. 28.

The price of crude oil on the New York Mercantile Exchange has tumbled 22 percent since reaching a record high of $147.27 a barrel on July 11, reducing costs for Indian refiners. India imports more than 70 percent of its annual oil needs.

Crude oil for September delivery recently traded at $115.01 a barrel, 1.1 percent higher than the close on Aug. 15, when it touched a low of $111.34. The oil price rose today as Tropical Storm Fay prompted evacuations from rigs and production platforms in the Gulf of Mexico.

To contact the reporter on this story: Anoop Agrawal in Mumbai at aagrawal8@bloomberg.net.