Ukraine under attack: Massacre on bourses, crude crosses $100

Ukraine under attack: Massacre on bourses, crude crosses $100

  • Business
  • February 25, 2022
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The Russian invasion of Ukraine led to a massacre on the bourses with the BSE Sensex falling over 2,700 points to end at 54,529.91. However, gold and silver prices rose by nearly three per cent.

Crude rose by eight per cent to cross $100 per barrel and is poised to climb further after the US cut off Russia from the international financial system, which it controls. The rupee slid against the US dollar and could slip further unless the RBI intervenes massively.

On Tuesday, Union Finance Minister Nirmala Sitharaman had cautioned that the rising crude prices due to the tensions could pose a threat to India’s macro-economic stability. Traders said incessant foreign fund outflows also weighed on the markets. On a net basis, foreign institutional investors sold equities worth Rs 3,417.16 crore on Wednesday. Fundamentals remained tilted against the rupee due to inflation-related concerns on higher crude prices and geopolitical tensions also leading to safe haven buying for the dollar. Over the last few years, the RBI has boosted foreign reserves, which could help it counter the volatility in the rupee exchange rate. But the rupee is likely to remain under pressure and could slide to 75.80-76.20 to a dollar, feared analysts.

If the current situation further escalates, investors will cling on to safe haven assets or sit on cash. Along with geo-political tensions, rising inflationary concerns has also been supporting precious metal prices on lower levels.

However, the biggest spike could be in gas prices because while OPEC+ has some spare capacity in crude and Iran could help, it is much more difficult to ramp up gas production and supply.

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