* Rupee ends at 60.1550/1650 per dlr vs 59.76/77 on Friday
* INR falls to 60.23/dlr, lowest since May 6
* INR may stay below 60/$1 if RBI holds off, Iraq crisis
(Updates with closing levels, data)
MUMBAI, June 16 The Indian rupee weakened to its
lowest level in more than a month on Monday as surging crude oil
prices threatened to push up domestic inflation pressures and
aggravate the country's current account deficit.
Alongside, data showed wholesale price inflation
in India accelerated to a five-month high of 6.01 percent in
May, which further hurt the rupee and pulled it down intraday to
60.23 per dollar, a level last seen on May 6.
Brent crude rose towards $113 a barrel on Monday after a
strong rally last week, as Sunni insurgents advanced in Iraq,
intensifying concerns over a potential disruption to oil exports
from the second-largest OPEC producer.
India imports nearly two-thirds of its oil needs, leaving
its currency especially vulnerable to price swings.
Traders were also seen buying the greenback as they looked
to square off their short dollar positions.
"As long as the Iraq crisis continues, this should be the
trend for the time being. And, if RBI doesn't intervene, and the
Iraq crisis continues, it will definitely remain below 60 to the
dollar," said Ashtosh Raina, head of forex trading at HDFC Bank.
The central bank is expected to buy or sell dollars to
prevent any excessive volatility in the currency.
In recent months, the central bank has been aggressively
buying dollars to prevent sharp gains in the rupee from hurting
export growth while also building up its foreign exchange
The partially convertible rupee ended at
60.1550/1650 per dollar versus its previous close of 59.76/77 on
Equities also fell on Monday, to their lowest close in 1-1/2
weeks on risk aversion among investors due to tensions in Iraq
Traders will now focus on whether the dollar can gain more
should the U.S. Federal Reserve provide new hints on the timing
of interest rate hikes when it concludes its two-day policy
meeting on Wednesday.
For the near-term, traders expect the rupee to trade in a
In the offshore non-deliverable forwards, the
one-month contract was at 60.52, while the three-month was at
FACTORS TO WATCH
* Yen, Swiss franc rise on Iraq concerns, pound at 5-yr high vs
* Belka tape hits Polish assets, Iraq, Ukraine weigh
* Shares struggle, oil firms on Iraq anxiety
* Foreign institutional investor flows INFII INFII01
* For data on currency futures INRFUTURES
DIARIES & DATA:
Indian Data Watch ECONIN European diary WEU/EQTY2
Indian diary IN/DIARY US Diary US/DIARY
(Reporting by Neha Dasgupta; Editing by Kim Coghill and Prateek