The US dollar is down against the Indian rupee on Friday. The rupee has slumped to its lowest level against the dollar since September under a barrage of US dollar strength before the release of India GDP data.
USD/INR was higher by 45 pips (+0.64%) to 72.109 with a daily range of 71.655 to 72.272 as of 10.30am GMT. The currency pair has broken above 72.00 resistance and is now at multi-month highs. It has a weekly gains of +0.35%.
Impact of coronavirus threatens INR
Today data from India is expected to show India’s economic growth accelerated for the first time in seven quarters, rising by 4.7% – up for 4.5% in Q2. Unfortunately the sense is that the good news will be fleeting. The negative impact of the coronavirus could easily pull economy back down again just as it was coming out of prolonged slump. So far the number of cases in India is low but that is likely more a matter of under-reporting. India is though to be highly exposed to the virus because of its dense population and high levels of migration.
As evidence of the toll the coronavirus is already having on travel and business, the Indian government has taken the precaution today of suspending the visa on arrival of South Korean and Japanese nationals due to the coronavirus outbreak in those countries. At the same time Saudi Arabia has turned back a flight with over 100 Indians back to India.
COVID-19 outbreak concerns put pressure on the USD
The rupee has slumped to its lowest level against the dollar since September under a barrage of US dollar strength. Falling oil prices had been insulating the rupee for the kind of weakness seen in other currencies but the floodgates might have just opened to more selling. Now the US Dollar – Indian Rupee exchange rate is threatening to breakout to a new uptrend that could take prices out of its 5-month consolidation to the highest level since late 2018.
In the United States, a report that California is monitoring 8400 people who could have the coronavirus is worrying investors. The state was always going to be heavily exposed because of its geographical proximity to China and the large Chinese American population who could be more likely to be travelling to and from China. The concern of a US outbreak had been pressuring the dollar early in the week, but it has resumed its status as a haven, gaining against most major currencies.