Rupee Depreciation Threatens Relief from Fuel Price Hike
SBI Ecowrap reports that any further depreciation of the rupee against the dollar could nullify the gains from a recent Rs 3/litre increase in fuel prices. The hike aimed at easing OMC losses of Rs 52,700 crore; however, rupee weakness might erode these benefits by increasing crude import costs.
The recent hike in vehicle fuel prices by Rs 3 per litre, intended to mitigate under-recoveries for oil marketing companies, could be nullified if the rupee continues to fall against the US dollar, according to SBI Ecowrap.
The report highlights that the increase is projected to offer Rs 52,700 crore in relief for the OMCs, equating to 15% of their expected total losses in the fiscal year 2027. Yet, any further rupee depreciation could fully offset this relief by elevating the cost of crude imports.
The rupee's recent descent past the significant 96/USD mark, closing at 95.81, underlines a critical threshold. With OMCs currently enduring losses of Rs 1,000 crore daily, the economic impact is substantial amid rising global crude prices exacerbated by international conflicts.
(With inputs from agencies.)
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