The rupee slipped further by 95 paise to 76.15 against the US dollar in opening trade on Monday amid sharp rise in coronavirus cases in the country and heavy selling in domestic equities. Forex traders said market participants are concerned that the sharp rise in coronavirus cases, with nearly 400 cases in the country, could weigh on the economy.
The rupee which opened on a weak note at 75.90 at the interbank forex market, lost further ground and touched a low of 76.15 against the US dollar, registering a decline of over 95 paise over its last close. Earlier on Friday, the rupee had settled at 75.20 against the US dollar.
Traders said there is a sense of anxiety among investors as they see the global as well as domestic economy plunging into a deep crisis due to coronavirus (Covid-19) pandemic that has killed over 14,000 and sickened lakhs of people around the globe. Moreover, the steep decline in domestic equities and sustained foreign fund outflows further dampened the sentiment, they added.
Abhishek Goenka, Founder & CEO, IFA Global, said “The Global Coronavirus situation continues to become grim by the day. Several countries across Europe have come to a grinding halt on acciubt of a total lockdown. Economic activity has come to a standstill. Cases and deaths in US are on the rise. There is complete uncertainty with respect to when normalcy would be restored and what kind of damage it would do to the global economy until then. This uncertainty has triggered a flight to safety. There is a scramble for US Dollars. US treasury yields have dropped on account of risk aversion.”
Talking about the road ahead, Mr Goenka said, “The RBI would have to continue to ensure ample liquidity. It announced a Rs 30,000 core open market operation (OMO) to stabilize bond markets. We expect the liquidity to dry up in FX market and quotes to become wider as participation tapers off. Operational and liquidity risk in such a situation would be at par with market risk.”
The dollar index, which gauges the greenback’s strength against a basket of six currencies, fell 0.52 per cent to 102.28. The 10-year government bond yield was at 6.31 per cent in morning trade. And Brent crude futures, the global oil benchmark, fell 2.74 per cent to USD 26.24 per barrel.
The total number of coronavirus cases in the country climbed to 390, according to the Union Health Ministry. The government has completely locked down 80 districts in 17 corona-virus affected states till March 31 in an effort to control the spread of the deadly Covid 19 contagion. States such as Punjab and West Bengal have also announced a complete lock-down to enforce social distancing.
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