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Oil Petrol prices cut By 49 Paise/Litre, Diesel by Rs 1.21

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By Newsgram Staff Writer

In a relief to consumers, the oil companies have decided to cut the petrol prices by 49 paise per litre and diesel by Rs 1.21 a litre. The reduction which will be effective from midnight has been attributed to the softening  international oil rates.

A statement issued by Indian Oil Corp said, ” Prices of petrol in Delhi will be Rs 60 a litre as against current level of Rs 60.49, while diesel will cost Rs 48.50 per litre, as compared with Rs 49.71.”

After the revised petrol rates are rolled out, it will cost cheapest in Delhi at Rs 60 per litre as compared to the other metro cities. In Kolkata the price will be Rs 67.48 (down 40 paise), Mumbaikars will have to shed Rs 67.53 per litre, and Chennai residents will have to spend Rs 62.75 (down 51paise) for a litre of fuel.

The fall in fuel prices follows two rounds of price hikes in February and March.

Since the last price change, “the international prices of both petrol and diesel have declined. The Rupee-US Dollar exchange rate has, however, depreciated. The impact of both these factors warrants decrease in retail selling prices of both petrol and diesel,” IOC said in a statement.

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Indian Rupee: One Of The Worst Performing Currencies

The rupee is still overvalued, according to the 36-country Real Effective Exchange Rate calculation after adjusting for inflation

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Indian Rupee: One Of The Worst Performing Currencies. flickr

The Indian rupee’s plunge to an all-time low of 69.09 against the US dollar, compared to the previous low of Rs 68.865 in November 2016 reflects the ill-effects of US President Donald Trump’s disastrous economic policies on the world at large. Indeed, American protectionism through higher import duties coupled with the consequences of renewed US sanctions against Iran is indeed playing havoc with economies across the world. That the rupee has fallen by more than eight per cent over the last one year is not good news for India, though, there is a silver lining in terms of the possibility of higher exports. The hard reality is that the rupee is one of the worst performing currencies in the world and the consequences of American policies could make things worse.

Not only have foreign institutional investors been pulling out funds from the Indian market, having withdrawn a whopping Rs 46,197 crore in three years, the spectre of higher crude prices due to the sanctions against Iran could disturb the applecart further considering that India depends heavily on crude imports to meet its oil needs. If there is any consolation at all for the rupee’s plunge, it is that most emerging market currencies are crashing.

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Indian currency notes. Pixabay

Also read: Crores of rupees being spent on defunct websites of Municipal Corporation of Delhi

The Reserve Bank’s prop by selling US$400 to 500 million in one-month futures contracts has saved the day for India. Almost an equal amount has been sold through Mint Street. Mercifully, a weak rupee need not be necessarily bad for the Indian economy. The rupee is still overvalued, according to the 36-country Real Effective Exchange Rate calculation after adjusting for inflation. As of May, the over-valuation was 14.67 per cent. This could give exports a boost which is a silver lining. There is also a Moody’s report which says that India is one of the five countries that are least vulnerable to currency pressures amid strengthening of the US dollar due to low dependence on external capital. But the downside is that as US interest rates go up, investors who borrowed at a cheaper rate would find returns from investing in India not worth the risk. On balance, major economic challenges lie ahead of India meeting with would be no mean task. (IANS)