Global Commodity Prices and the INR

The $CRB index gives global price levels of a basket of commodities and is an important indicator that is watched to get clues on whats happening. The index has been declining of late and this would certainly seem to benefit countries like India that have a whopping oil (and gold!) import bill. However, the INR seems to be playing spoilsport. Any gains from a drop in global commodity prices seems to be getting undone by a concomitant drop in the INR. I constructed the below chart to figure out the relative movement of the $CRB and the INR:USD exchange rate. The correlation comes to a high -0.75.