Chart of the day: Is rising crude price a key reason for pressure on rupee?

Riken Mehta
Moneycontrol.com

As seen from the chart, global crude price has risen over four times in the last 12 years, and India’s crude import bill has surged more than ten-fold. However, absolute consumption of crude has grown only 131% during the same period. Also, it is interesting to note that the rupee has remained in a band of 40-50 to the dollar (based on the average rupee value for the fiscal) over the last 12 years. Experts have been calling for a steep hike in fuel prices so as to deter consumption and lower our import bill and thereby ease pressure on the rupee. But as the chart shows, a sharp jump in consumption is not what has driven up the crude import bill; rather it has to do with the spike in global crude prices. For India to get a handle on its import bill, crude prices have to correct sharply.

For chart, Click on the attachment

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