India’s rupee declined for the first time in a week on speculation surging oil prices will stoke inflation and damage the country’s economy. Crude traded near the highest level in 29 months on concern the political turmoil in North Africa and the Middle East will disrupt global supplies of the fuel. India imports almost 75 percent of the oil it uses. Finance Minister Pranab Mukherjee said the government aimed to reduce the deficit for the next fiscal year beginning April in his budget speech this week. “The rally on positive sentiment following the budget announcement is over and concern of rising oil prices is back,” said Naveen Raghuvanshi, a Mumbai-based currency trader at Development Credit Bank Ltd. The rupee weakened 0.1 percent to 45.0013 per dollar as of 11:42 a.m. in Mumbai, according to data compiled by Bloomberg. It fell by as much as 0.3 percent earlier. The currency has declined 0.7 percent so far this year. The budget shortfall will ease to 4.6 percent of gross domestic product in the 12 months through March 2012 from 5.1 percent in the current period, Mukherjee said. To contact the reporter responsible for this story: Khalid Qayum in Singapore at kqayum@bloomberg.net To contact the editor responsible for this story: Sandy Hendry at shendry@bloomberg.net

Source