No major economic impact of Iran-Israel conflict, but vigil up: India official
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The ongoing Israel-Iran conflict is unlikely to have any major economic impact on India unless it escalates into a broader and protracted regional conflagration but the government is keeping a close watch on the evolving situation, a senior official said.The conflict, however, could potentially stoke volatility in global crude oil prices , capital flows, currency movement and shipping costs in the short term, the official conceded.While it's "too early" to gauge the precise impact on India, the finance ministry and regulators would continue to maintain heightened vigil in view of the volatility across markets, the official told ET.Nevertheless, given its strong macroeconomic fundamentals, India is on a strong footing to tide over any such global crisis without much bruise, he said.He also ruled out any sharp and durable impact of the crisis on non-energy commodity prices globally over the medium term.Indian stocks fell on Friday tracking a global sell-off and the rupee depreciated against the dollar as worries about the Israel-Iran conflict weighed down investor sentiments.The benchmark Sensex and Nifty nosedived 0.7% each on Friday. The rupee depreciated 0.6% to close at a two-month low of 86.09 against the greenback, as the dollar index strengthened with investors scrambling for safe haven assets.Brent crude oil prices spiked 12% to $78.5 per barrel in the early hours of Friday morning following the Israeli strike. The prices, however, pulled back to less than $75 a barrel after reports emerged that Israel had not targeted Iran's oil infrastructure but limited its strike to Tehran's nuclear facilities. The Israeli strikes have raised fears if Iran could retaliate by trying to close the Strait of Hormuz, a vital choke point for about a fifth of the global oil supply. In that case, shipping and related insurance costs could rise sharply.Meanwhile, US gold futures inched up more than 1% to touch its peak in nearly two months amid heightened demand for haven assets.
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