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FUEL PEAKS AS RS HITS ROCK BOTTOM

Tuesday, 04 September 2018 | PNS | New Delhi– Rs  sinks to historic 71.21/$; petrol, diesel prices soar to all-time high  As the downward slide of the Indian Rupee continued and it crashed to a historic low of 71.21, the petrol and diesel prices in the country touched all-time high after they saw an upward revision of 31 and 39 paise respectively on Monday. The twin issues, which threaten to widen current account deficit and derail economic recovery, have triggered a major uproar among the common man. The Rupee lost 21 paise against the US dollar as nagging concerns over rising crude oil prices and trade war tensions continued to hurt forex market sentiment. In tandem, price of petrol in Delhi rose to a record Rs 79.15 a litre and touched Rs 86.56 in Mumbai. Diesel rates were hiked by 39 paise per litre — the steepest increase since the daily revision in prices was introduced in June 2017 — to Rs 71.15 a litre in Delhi. Diesel now costs Rs 75.54 a litre in Mumbai. Prices in Delhi are the cheapest in all metros and most State Capitals due to lower sales tax or value added tax. Fuel prices vary from State to State due to local levies. Petrol prices have risen by over Rs 2 per litre since August 16. Diesel prices have risen by Rs 2.42 a litre during the period. Officials said the spike in rates is on account of exchange rate falling to a record Rs 71 to a dollar, depreciating by Rs 2.5 in a month. The rising petrol price and falling Rupee has come as major setback for the Modi Government as the Opposition has blamed it for not taking steps to control the situation. “When the crude prices were falling in international market, the Modi Government imposed heavy taxes to loot the people. Today, when people are crying for relief and the Government is claiming that economy is upbeat, why can’t they take measure to provide some succor to the people,” asked Congress spokesperson Sanjay Jha. Much to embarrassment of the BJP, its own MP Subramanian Swamy said the petrol prices should be capped at Rs 48 per litre and anything above it is “extortion.” However, no respite seems to be in the offing. The crude oil has gained $7 a barrel in a fortnight, driven by fears that the US sanctions on Iran will likely contract supplies. Appreciation of the dollar against the Rupee has also pushed up rates for compressed natural gas as well as piped natural gas, since the price of gas procured by city distributors is mostly dollar-denominated. Indraprastha Gas Ltd., which retails gas in the national Capital, on Sunday raised the prices of CNG by 63 paise per kg and by Rs 1.11 per standard cubic meter for piped natural gas supplied to households for cooking purposes. It was a virtual crash for the Rupee during the late afternoon session which also saw collapse of the stock market, which ignored the strong GDP number that came on the weekend. The rupee opened with strong gains, 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. Currency watchers said Rupee could easily breach the 72 level, and if the global trade war and surge in crude prices continued, it could head towards 73 zone. This could widen the current account deficit and impact the economic recovery in big way. In early trade, the Rupee resumed on a firm foot at 70.80 against weekend close of 71.00 at the inter-bank foreign exchange (forex) market. It later strengthened to hit a high of 70.71 following bouts of dollar selling by banks before taking a sudden U-turn in late afternoon deals. The Rupee witnessed heavy downside selling pressure with unexplained fatigue and exhaustion towards the fag-end trade and finally ended at the historic level of 71.21, showing a steep loss of 21 paise, or 0.30 per cent.

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