NISM Certifications · NISM-Series-XV: Research Analyst · Fundamental Analysis of Commodities
Which of the following is most likely to push up the domestic price of crude oil-linked products in India, other things remaining the same?
Rupee depreciation against the dollar most likely raises domestic prices of crude-linked products. Crude is imported and priced in dollars, so a weaker rupee makes each barrel cost more in rupees, whereas the other options would lower or not raise prices.
- ADepreciation of the rupee against the US dollarCorrect
- BAppreciation of the rupee against the US dollar
- CA fall in global crude demand
- DAn increase in OPEC production quotas
Explanation
India imports most of its crude, priced in dollars. A weaker rupee means more rupees are needed per barrel, raising domestic costs. Rupee appreciation, lower demand and higher supply would each tend to reduce prices.
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