If the current trend continued, it would further weaken the rupee Picture by ShutterstockExports of petroleum products have fallen because of a higher domestic demand, which could have an impact on the country’s trade deficit and rupee value. Analysts said if the current trend continued, it would further weaken the rupee as oil product exports act as a natural hedge against dollar-denominated oil imports. “The export of petroleum products provide a natural hedge against imports of oil and the forex spent on imports of oil. Therefore, if exports slow down, then the natural hedge to that extent is lower. The decline in oil product exports comes at a time oil imports have been rising steadily as the country meets a higher percentage of its total domestic demand from the overseas markets.

Source: The Telegraph March 21, 2019 21:22 UTC