Rupee breached October 2018 lows of 74.48 against the US dollar
Trading had to be temporarily halted on NSE after Nifty slumped 10% in early trade
The Indian rupee today hit a record low of 74.50 against the US dollar, breaching previous low of 74.48, hit in October 2018. But later pared all the losses and settled higher at 73.91 as compared to 74.21 in the previous session, mirroring a similar recovery in domestic equity markets. During the day, the traded in the range of 73.90 to 74.50 against the US dollar.
Over the past few days, the rupee had been sliding against the US dollar as emerging market currencies feel the heat of global risk-off sentiment. Financial markets globally are facing intense selling pressures on extreme risk aversion due to the spread of coronavirus infections and have caused a mismatch in dollar liquidity across the world, the Reserve Bank of India said in a statement on Thursday.
Domestic equity markets also staged a big intraday recovery to close in the green. Trading on BSE and NSE had to be halted Nifty slumped 10% in early trade. But later Sensex settled over 1,300 points higher in one of the biggest intraday pullback of recent times.
"The panic in equities has not snowballed into currencies to the same extent," IFA Global said. The Reserve Bank of India has done a good job of containing volatility so far, it added.
Traders expect the RBI to step in to prevent further sharp falls in the currency but don't see it protecting the rupee at any particular level.
The RBI on Thursday announced that it will conduct sell/buy swaps in the foreign exchange market to ensure adequate dollar liquidity amid the current global rout in markets, with the first such swap for $2 billion to be held on March 16.
India has announced over 70 confirmed cases of coronavirus so far and on Wednesday said it will suspend the vast majority of visas to the country in a wide-reaching attempt to prevent the spread of coronavirus.