The depreciation in the rupee had a minimal impact on global commodities in India due to reduced local demand especially in the base metals sector. The impact was slightly more on precious metals due to buoyant consumers’ sentiment in the ongoing festive season.
The rupee declined 0.43 per cent to surpass the benchmark 50 and closed at 50.03 against the dollar.
As compared to 1.37 per cent rise in gold prices at $1,643.07 an oz in London in early afternoon trade, the yellow metal in Mumbai closed with a gain of 0.95 per cent to Rs 26,450 per 10 g. Similarly, silver gained 2.25 per cent to $31.30 an oz in London translating thereby, a gain of 1.13 per cent to Rs 52,900 a kg in local market.
The impact was noticeable in precious metals due to macro economic factor, said Gnanasekar Thiagarajan, director of the commodity research firm Commtrendz Research.
“European thinktank is meeting on Sunday to devise a clear resolution on the bail out package which would prove a decisive factor for the international commodities. Traders are keeping fingers crossed as to which side international commodities would go,” he added.
However, the prices of base metals in spot local markets remained almost unchanged despite up to three per cent of appreciation in their prices on the benchmark London Metal Exchange (LME) on Friday. Further, the lack of business in spot sales due to a holiday season nullified the impact of rupee depreciation which ideally makes imported goods costlier.
“Assuming rupee to appreciate to 42-43 against the dollar, a majority of copper processors had imported scrap when the greenback was hovering between 45 and 46 a couple of months ago. Around the same time, copper was trading around $8,000 a tonne on LME. Hence, traders are holding huge inventory they had built on highs. Since, the business sentiment is deadly down, the base metals prices kept almost unchanged,” said Surendra Mardia, director of Bombay Metal Exchange, the premier trade body of over 1000 base metals traders in India.
The price movement is a function of demand and supply. Since, the demand has been almost nil, any further price escalation would push the entire trade into doldrums, he added.
Against 2.10 per cent rise in LME prices to $7,062 a tonne, the benchmark copper wire bar in Mumbai jumped a marginal 0.23 per cent to Rs 444 a kg.
Similarly, nickel’s 2.84 per cent price appreciation to $18675 a tonne on the LME translated to negligible 0.18 per cent rise to Rs 1097 a kg in Mumbai. Tin prices in London rose by 1.92 per cent to $21,760 a tonne resulting into 0.39 per cent spurt in the metal’s price in Mumbai to Rs 1,300 a kg.
