Rupee drops further by 34p to over 3-month low on coronavirus threat - Eastern Mirror
Thursday, March 23, 2023

Rupee drops further by 34p to over 3-month low on coronavirus threat

By PTI Updated: Feb 24, 2020 10:40 pm

Mumbai, Feb. 24 (PTI): The rupee on Monday fell by 34 paise to close at more than three-month low of 71.98 against the US dollar, tracking heavy selling in domestic equities and strengthening of the American currency in the overseas market.

Forex traders said investor sentiment remained fragile amid concerns over the impact of coronavirus outbreak on global economy.

The death toll due to coronavirus climbed to 2,592 with 150 new fatalities while the total number of confirmed cases increased to over 77,000, Chinese health officials said on Monday.

However, easing crude oil prices supported the local unit and restricted the fall to some extent.

At the interbank foreign exchange market, the local currency opened on a negative note at 71.94. During the day, the domestic currency touched a high of 71.76 and a low of 72.01 and finally settled 34 paise lower at 71.98 against the US currency. This is the lowest closing level since November 13 when the rupee had settled at 72.09.

Financial markets remained closed on Friday on account of ‘Mahashivratri’.

Indian stock markets closed with deep losses following a massive sell-offs in global equities as spike in new coronavirus cases beyond China spooked investors.

“In line with other Asian currencies, the rupee declined amid concern over coronavirus outbreak, which is threatening to damage the global economy,” said said V K Sharma, Head PCG and Capital Markets Strategy, HDFC Securities.

“Indian rupee is likely to stay under pressure in the next few days amid month-end dollar demand and risk off sentiments. Spot USDINR is having multiple top resistance at 72.15 and support at 71.32,” he added.

According to Jateen Trivedi, Senior Research Analyst (Commodity & Currency) at LKP Securities, the downturn in the rupee was majorly due to coronavirus spreading beyond China to other countries, raising concerns over global slowdown and boosting demand for the US dollar as a safe investment bet.

“Going ahead the rupee will take movement according to deal talks between the US and India during the Trump visit which can give some positive moves to domestic currency,” Trivedi said.

The dollar index, which gauges the greenback’s strength against a basket of six currencies, rose by 0.31 per cent to 99.56.

The 10-year government bond yield was at 6.33 per cent.

Global crude oil benchmark Brent dropped 4.09 per cent to trade at USD 56.11 per barrel amid concerns over global growth.

“Today most Asian currencies were weighed down including the rupee on expectation that coronavirus could derail the world growth,” Motilal Oswal Financial Services Forex & Bullion Analyst Gaurang Somaiyaa said, ading that in the next couple of sessions rupee is expected to quote with a negative bias in the range of 71.70 and 72.20.

On the domestic equity market front, the 30-share BSE gauge settled at 40,363.23, dropping 806.89 points or 1.96 per cent. While, the broader NSE Nifty sank 251.45 points or 2.08 per cent to 11,829.40.

Foreign institutional investors sold equities worth INR 1,495.25 crore on a net basis on Thursday, according to provisional exchange data.

The Financial Benchmark India Private Ltd (FBIL) set the reference rate for the rupee/dollar at 71.5899 and for rupee/euro at 77.2522. The reference rate for rupee/British pound was fixed at 92.3958 and for rupee/100 Japanese yen at 64.21.

By PTI Updated: Feb 24, 2020 10:40:41 pm