Fuel prices in India at record high

Fuel prices in India at record high
MUMBAI, SEP 3 | Publish Date: 9/3/2018 12:28:40 PM IST


 Petrol and diesel prices climbed new highs across the country driven by combination of surging global crude prices and falling rupee value, stoking inflationary pressure in the economy.

On Sunday, Union Petroleum and Natural Gas Minister Dharmendra Pradhan had blamed “external factors” for the rise in domestic prices of petrol and diesel, but said the increase is temporary. “I would like to mention two points, and both these subjects are external. OPEC (Organisation of the Petroleum Exporting Countries) had promised that it will raise production by one million barrels per day, which was not raised. “Apart from that, crises in countries like Venezuela and Iran are increasing. There is a pressure on oil prices due to a decrease in production. Secondly, global currencies have weakened against the US dollar,” he had said.

Petrol price in Delhi rose to a record Rs 79.15 a litre and diesel climbed to a fresh high of Rs 71.15, according to price notification of state-owned fuel retailers.

This follows a 31 paise/litre hike in prices on Monday. Rates have breached the previous high of Rs 78.43 a litre hit on May 28. On that day, the rate in Mumbai was Rs 86.24 per litre.

A litre of petrol in Mumbai costs Rs.86.56 on Monday.

Prices in Delhi are the cheapest in all metros and most state capitals due to lower sales tax or VAT.

Diesel rates on Monday were hiked by 39 paise a litre, the steepest increase since the daily revision in prices was introduced in mid-june 2017. Diesel now costs Rs.75.54 per litre in Mumbai.

In Dimapur and Kohima petrol price stood at Rs. 76.91 and Rs. 77.67 respectively as on Monday. While diesel in Dimapur cost Rs. 68.96 and in Kohima Rs. 69.53.

Since August 16, petrol prices have risen by over Rs 2 per litre. Diesel prices on the other hand have risen by Rs 2.42 a litre during this period.

Diesel rates had hit Rs 69.31 a litre on May 28, but this record was breached on August 27 and on Monday they hit a fresh high. Fuel prices vary from state to state due to local levies.

Rupee plunges to new life low of 71.21 Vs USD

Indian rupee Monday crashed to yet another historic low of 71.21, losing 21 paise at the close against the US dollar as nagging concerns over rising crude oil prices and trade war tensions continued to hurt forex market sentiment.

It was a virtual collapse for the Indian unit during the late afternoon session despite a strong start as investors hit the panic button and even government’s efforts to calm investor nerves failed to yield any result. A sharp rally in global crude prices further dampened the overall trading mood.

Benchmark Brent crude oil was trading at USD 78 a barrel.

The domestic currency opened with strong gains largely helped by weekend robust macro numbers also some technical bounces after recent record fall.

However, overall forex market sentiment suffered a sudden reversal of fortune contrary to expectation largely moving in line with local equities, reversing all early strong gains. India’s economy grew at a delightful 8.2 per cent rate in April-June this year after the twin shocks of cash ban in 2016 and the chaotic introduction the GST last year, reclaiming its position as the fastest growing major global economy this year.

The central bank has recently pulled several moves to support its currency including its foreign cash reserves along with raising its interest rate twice with the last in August to pre-empt any fresh bout of currency rout as the global trade war escalates.

Heightened risk associated with the swelling current account deficit against the grim backdrop of surging global crude prices and global turmoil have all contributed to excess volatility on the trading front.

Escalating global trade tensions could prompt further weakening the domestic currency along with exodus of capital from a nation also added excess volatility.

The bond yield curve also jumped substantially to hit multi-year high of 8 per cent.

With year-to-data, the rupee has fallen by 11 per cent - making it the worst-performing currency in Asia.

Crude prices supported by concerns that falling Iranian output will tighten markets once US sanctions bite from November but gains were limited by higher supply from OPEC and the United States.

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