Rupee Drops Below 76 Mark Against Dollar Amid Coronavirus Crisis
- After starting the session 0.49 per cent (37 paise) lower at 75.97, the rupee weakened to as low as to 76.08 in the first half of the day.Â
- Weakness in domestic equity markets also put pressure on the rupee, as benchmark indices S&P BSE Sensex and NSE Nifty dropped more than 1 per cent amid volatile trade following a positive opening. The domestic forex markets remained closed on the first two days of the month on account of the annual closing of banks and Ram Navami holidays respectively.Â
- Crude oil prices fell 3 per cent on Friday, coming off their biggest one-day gains in the previous session, as doubts emerged about a deal between top producers Saudi Arabia and Russia to cut output. Brent crude futures - the global benchmark for crude oil - were last seen trading down 9 cents at $29.05 a barrel, after having soared 21 per cent on Thursday.
- Analysts say the rupee is likely to stay weak along with other emerging market currencies until the coronavirus pandemic subsides.
- "Lower crude prices have eased pressure on the rupee to some extent... A further rise in oil prices will have a negative impact on the rupee," Abhishek Goenka, founder and CEO of forex advisory firm IFA Global, told NDTV.
- "Another 30-40 per cent surge in the crude price alongside weak appetite for riskier assets and a stronger dollar will increase the probability of break above 76.40 level."
- According to a poll of market strategists and analysts by news agency Reuters, the rupee would strengthen 3.1 per cent to 74.00 against the dollar in a year.
- It is forecast to trade at 75.55 per dollar by the end of April. Its path will largely depend on how successful the government's steps are in containing the spread of COVID-19.Â
- Analysts say Reserve Bank of India interventions have prevented the rupee from falling further. The RBI cut interest rates on March 27 by 75 basis points - its biggest cut since 2009 - to 4.40 per cent, following 135 basis points of cuts in 2019. The RBI also announced targeted long-term refinancing operations to ensure market liquidity.Â
- While there are more than one million declared cases of coronavirus worldwide, in India, the tally of confirmed cases has crossed the 2,000 mark.
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