The US dollar is higher against the Indian rupee on Thursday morning with the greenback surging against almost every global currency in a huge flight to safety as financial markets crack under the weight of the coronavirus pandemic.
USD/INR was higher by 57 pips (+0.77%) to 74.26 with a daily range of 74.55 to 75.15 as of 10am GMT. USD/INR jumped through weekly resistance at 74.50 to reach 75 for the first time. The exchange rate is now +1.76% for the week.
Indian rupee falls as India outflows top $10 billion
A rising number of coronavirus cases in India are adding to local concern, pulling the currency down with Indian stock markets. The Sensex is off 2017 lows reached earlier in the day after a daily decline of over 7% while the Nifty 50 is down near the lows after the November 2016 Cash ban.
According to Bloomberg data, investment outflows from Indian shares and bonds have topped $10 billion this month alone. There was some hope on Thursday that Prime Minister Narendra Modi may increase the levels of stimulus already announced to tackle the coronavirus pandemic.
So far the Reserve Bank of India has held back from a major intervention but has reportedly been selling dollars and buying rupees through local banks to stem the decline of the rupee.
US dollar continues upsurge after latest Fed intervention
For the moment there is little that global central banks can do against a flood of international capital exiting foreign currencies and buying dollars. Dollar shortages are being widely cited despite the massive influx of liquidity already being offered by the Federal Reserve.
New measures were introduced by the Fed overnight in concert with a surprise move from the European Central Bank (ECB), more action from the Bank of Japan (BOJ) and Bank of Korea and an expected announcement from the Reserve Bank of Australia (RBA). The Fed started a new facility designed to support mutual funds from large investor redemptions called the called the Money Market Mutual Fund Liquidity Facility.