Oil flares up to $122; rupee close to 41 against dollar

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Agencies Posted: May 07, 2008 at 2345 hrs IST

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MUMBAI, MAY 6 : With crude Oil sizzling at $122 a barrel, the rupee plunged to almost 41 per dollar on Tuesday, its lowest in more than eight months. Oil companies scrambled to cover their import payment needs after crude hit a record high. The rupee ended at 40.95/96 per dollar, 34 paise lower from Monday’s close of 40.61/62.

“The rupee touched 40.98 and looked set to fall below the 41 level during trade. Heavy dollar buying triggered stop-loss orders to close positions that became unprofitable as the rupee fell, adding to the pressure on the currency,” said a dealer.

The rupee is expected to remain under pressure as oil and commodity prices continue to stay high, adding to worries about a widening trade deficit, rising Inflation and slowing capital inflows. A weak dollar is expected to boost shares of software and export-oriented companies.

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