Indian rupee deepened losses, hitting record low after the country confirmed its first COVID fatality. Risk appetite took a beating, with panic selling across global markets amid escalating worries about the impact of rapidly spreading novel coronavirus infections. The Indian unit had opened at 74.39 a dollar and touched a record low of 74.50 so far today. Its last record low was 74.48 a dollar, hit on 11 October 2018. The rupee has declined by 4.1 per cent so far this year. However, expect that the fall in rupee will be arrested because of the narrowing of current account deficit, a decline in retail inflation, and expansion in factory output along with new measures announced by the Reserve Bank of India (RBI) to boost liquidity.
‘The impact of the COVID-19 outbreak in India has started to weigh on the rupee, and if it continues, equity portfolio flows could accelerate acting as a drag on the currency. Nonetheless, after the moves in the past two weeks, USDINR risk-reversal has risen to extreme risk aversion territory—and does not reflect the recent collapse in oil prices,’ said UBS in a report to its investors.
Read EquityPandit’s Nifty Outlook for the Week