USD/INR: Rupee Recovers From Record Low Level

USD/INR, Rupee today strengthened by 15 paise against USD due to surge in Indian stock market settling at 76.55. INR opened low and fell further to 76.88 but recovered soon during the day.

USD weakened during the day because of the deal between Facebook and Reliance Industries that saw the stock gain by 9.83%. Also, USD lost its momentum in European trade, hence giving room for INR to strengthen.

Historic Drop in Crude Oil Prices

Brent crude oil dropped over 12% to USD 16.98 per barrel, and the early gains by US crude market were washed off. Experts predict crude oil may drop furthermore to USD 11 per barrel in the coming days. Market is under high pressure due to substantial oversupply and restrictions on consumption due to lockdown, therefore forcing to stock up. For the first time in 18 years the price plummets to such low. With high production and low buyers, the main problem for crude oil remains storage. The US crude inventory stands at 13.2 million barrels as per the previous week.

In the Indian futures market, the price dropped by 33.61% thus slipping by INR 879 per barrel. ONGC today asked Government to waive-off oil cess and provide a share in royalty charged by Government as declining rates does not cover operating expenses.

IMF predicted the price of crude oil to drop further. Recovery may take more time from this historic fall in the time of Coronavirus crisis.

Gold Prices Rise

High demand for gold led to an increase in prices. Today, prices rose by 1.25% / INR 567 increasing to INR 45892 per 10 grams in futures contract. Gold is seen as a safe haven during these times of crisis. For investors, fall in currency value and inflation remain the biggest concern.

Reliance-Facebook deal, a Win-Win Situation

In this time of crisis around the globe, Facebook Inc signed a deal with Reliance Industries Limited and invested INR 43574 crores in Jio platforms. This deal gave a boost to the Indian market and share price of RIL rose by 9% approximately. Investor sentiment lifted since the deal as one of the biggest company in the world sees India as a potential market. This investment will be utilized in digital technologies. This deal will benefit RIL into deleveraging its balance sheet and hence becoming a zero debt company in coming years.

RIL also announced that Saudi Arabia’s largest oil producer, Aramco to invest in Reliance’s oil and petrochemical business with around INR 1.06 lac crores.

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