GBP/INR extends recovery gains, though it still trades close to the lowest level since August last year. Currently, one British pound buys 88.463 Indian rupees, up 0.37% as of 5:10 AM UTC. The price recently fell to around 86.000, but faced strong resistance from bulls and bounced back.
Coronavirus Pandemic to Hurt India’s Weakening Economy
The rupee is under pressure as investors fear that the coronavirus pandemic could damage the Indian economy, which has been already struggling with a slowdown caused by domestic factors.
Yesterday, the government led by Prime Minister Narendra Modi, announced tight measures to curb the spread of the virus. Domestic flights were cancelled, while most of the cities and regions are under total lockdown.
Shortly after Modi’s new emergency rules, UBS Securities cut India’s gross domestic product (GDP) growth forecast for the next financial year to 4% from an earlier estimate of 5.1%. In the current financial year that ends this month, the economy would only add 4.8%.
UBS economist Tanvee Gupta Jain commented:
“The challenge for India vs its peers is starker if infections spread rapidly considering the higher density of population per capita and weaker health infrastructure.”
India has confirmed 471 cases as of Monday, but health experts anticipate a surge in cases, which might be overwhelming for India’s public health infrastructure. The death toll reached nine people.
A team of scientists concluded that India might face between 100,000 and 1.3 million COVID-19 cases in about two months if the disease continues to spread at this pace. The projections might change if the government focuses on more testing and tightening social distancing measures.
Bhramar Mukherjee, a professor of biostatistics and epidemiology at the University of Michigan, commented:
“Even with the best case scenarios, probably, you are in a very painful crisis.”
Elsewhere, the UK has way more confirmed cases and deaths caused by the new coronavirus. Yesterday, the government confirmed 54 more deaths, bringing the death toll to 335. The number of new cases increased to 6,650.
Recently, Prime Minister Boris Johnson issued a “stay at home” order as part of the most stringent restrictions since the end of World War II.