The US dollar is down against the Indian rupee on Thursday with the rupee seen as a beneficiary of falling oil prices which slumped again on Wednesday to the weakest since late 2018. US President Trump’s warning that the coronavirus “will probably spread in the US” is weighing on the dollar.
USD/INR was higher by 33 pips (+0.04%) to 71.605 with a daily range of 71.539 to 71.69 as of 10am GMT. The currency pair continues to creep lower after Monday’s failed attempt to push through 72.00 failed. Accounting for the -0.33% fall on Wednesday, the exchange rate is -0.37% on the week so far.
INR boosted by low oil prices
The rupee is now up on the week against the dollar since falling oil prices offset some of India’s recent economic slowdown through lower priced oil imports. But also because the dollar is off its weekly highs across many currencies. Oil prices being depressed because of travel restrictions and border controls is not all good news for India. If oil imports are affected, India may find itself with a shortage. But for now, especially with no reported cases of the coronavirus in India, lower oil prices are aiding the rupee.
Hopes had been pinned on an emergency OPEC meeting next month to agree on oil production cuts and sure up the price of oil with lower supply to match the fall in demand. In a tragic irony, the meeting (where the purpose is to protect oil prices from the coronavirus threat) may not go ahead because of a possible case of the coronavirus in Vienna, Austria, where OPEC is headquartered, and the meetings are typically held.
USD down as Trump does not solve concerns about coronavirus
US President Donald Trump failed to lessen market concerns during his press conference on the coronavirus. He said nothing out of place but there was a sense the US might not be well prepared enough for an outbreak so the line that got the most attention was that the coronavirus will “probably spread in the US”. Adding to evidence that it might already be happening, the Centre for disease Control (CDC) confirmed a first case of coronavirus ‘of unknown origin.’