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Says price of crude oil, raw gold will ease

 
 The US dollar is likely to drop below Rs 50 in less than three months and stabilise at this level, on the back of a host of policy reforms, return of FIIs into the Indian stock market and weakening of the US Greenback against major currencies of the world, as per the forecast by an Assocham study.

After rising 25 per cent in the last one year, the dollar has been witnessing a sharp correction in the last two weeks after global investors turned back to India following the Centre’s determination to push ahead with reforms. The rupee is currently trading at around 53 to a dollar.

According to Assocham President Rajkumar N Dhoot: “The courageous decisions on FDI in multi-brand retail and hiking of diesel prices in the face of widespread political  opposition were the turning point. These decisions coincided with the quantitative easing in the US and Europe, resulting in rush of liquidity in the global markets.”

The most immediate gain from easing of dollar against rupee would be a sharp reduction in the landed price of crude oil and raw gold. These two items are the largest in the country’s import basket and big grains on the country’s current account deficit.

Besides, other imports such as pulses and edible oil would also see easing of pressure.
“To the extent, rupee gains, our infamous imported inflation would also come down,” Dhoot said, while stressing the need to keep the reform momentum intact. India meets about 80 per cent of its crude oil requirements from imports, and its gold imports last year were $60 billion.

If the trend of dollar depreciation continues and there is some downward movement in the international crude prices, there could be a pleasant surprise in terms of the oil marketing companies even reducing the pump prices, the study said.
“After all, it was on account of these two factors that the oil firms were compelled to increase the petrol and diesel prices,” it said.