Rupee impact: India paying record high prices for crude

This, when global prices nowhere near all time highs

Five years back in July, 2008 brent crude had hit an all time high of $147 a barrel. This made Indian companies cry foul as India imports nearly 80% of its oil consumption. Many of India's Inc honchos had said that $80-100 levels was a comfortable space for them to remain in business.

Brent crude has slightly surged its head on the back expected US military intervention in Syria. It's trading at around $117 a barrel - a discount of around 21% against the all time highs.

But situation is far more alarming for India. Thanks to the sharp 20% depreciation in Indian rupee over the last three months, Indian crude basket has got dearer by nearly 20% in rupee terms, despite the fact that in the international market crude is still $30 below than its historic highs.

"This is terrific situation. We are paying over Rs 7,500 for brent against what we paid in July 2008 which stood at Rs 6,300," says chief investment officer (CIO) at a foreign fund house.

Indian currency against US dollar traded at 55 in mid-May, which has now slipped all the way down to 68.7.

On the other hand, in July 2008, rupee was at 43.30 against US dollar and even at historic high prices of crude (in dollar term) the Indian crude basket could not surpass levels of Rs 6,500.

According to market participants, though there are talks of raising diesel prices too, it is hardly going to help the oil companies and economy in general. Steep decline in Rupee is further burdening the oil bills.