Analysts say that the rupee may remain under pressure against US dollar until the coronavirus crisis subsides
Investors are shifting to safe havens like dollar and gold from risky asset classes, say analysts
The Indian rupee fell against the US dollar today, dragged down by selling pressure in domestic equity markets. Domestic bond yields also spiked after the government announced aggressive borrowing plan for the first half of this year. The rupee fell to 76.37 at day's low before closing at 76.19 after opening weaker at 76.05 per US dollar. The rupee had settled at 75.60 against the US dollar on Tuesday. Forex markets in India were closed on April 1 for the annual closing of banks and on April 2 on account of Ram Navami.
Domestic stock market index Sensex fell nearly 700 points today weighed down by selling pressure from foreign investors, who moved out record money out of Indian markets in March.
Investors are shifting to safe havens like dollar and gold from risky asset classes, says Shrikant Chouhan of Kotak Securities. Gold futures on MCX today surged nearly 1.5% to about ₹44,000 per 10 gram.
"Rupee traded weak on expected lines with strong uncertainty ahead for global as well as domestic markets the currency keeps devaluing as it keeps pricing in the money outflows from FIIs," said Jateen Trivedi, Senior Research Analyst (Commodity & Currency) at LKP Securities.
he US dollar was also broadly higher against other currencies with the dollar index edging higher to 100.20. The dollar index measures the greenback's strength against a basket of six currencies.
Analysts say that the Indian rupee is likely to remain under pressure along with other emerging market currencies until the coronavirus pandemic subsides. The total cases in India jumped above 2,300, according to the latest figures.
The rupee's path will largely depend on how successful the Indian government's steps are in containing the spread of COVID-19 in a country of more than 1.3 billion people, the second-most-populous in the world, according to analysts polled by Reuters. The rupee is down over 6% since the start of the year, hitting a record low of about 76.40 last month.
Analysts say that the Reserve Bank may step in to prevent a sharp fall further in the rupee. The central bank last month cut interest rate by 75 basis points and announced targeted long-term refinancing operations to ensure market liquidity. (With Agency Inputs)