Weaker Rupee and Rising Oil Prices: A Double Whammy for India's Economy
India's inflation and money-market conditions could worsen due to a combination of rising crude oil prices and a weakening rupee, warns Emkay Wealth Management. Dr Joseph Thomas, Head of Research at Emkay, notes that India's risk is not limited to higher crude prices alone, as the impact of a weaker rupee alongside elevated oil prices could magnify domestic pressure.
The conflict in West Asia has led to volatility in Brent crude prices, which have surged from $75 to nearly $98 before moderating. Emkay identifies disruption to the Strait of Hormuz as a key risk, given that around 20% of global oil flows pass through this route.
The report suggests that while crude prices are likely to remain sensitive in the near term to conflict intensity and supply chain disruptions, global oil supply is expected to grow faster than demand over the medium to long term. This could put downward pressure on crude prices once geopolitical risks ease and supply routes normalize.