After two consecutive weeks of losses, the Indian Rupee is weakening versus the US Dollar again on Monday.
The US Dollar versus Indian Rupee exchange rate closed last week 0.1% higher at 75.47. The Rupee is down over 6% so far this year versus the greenback after hitting a record low last week.
At 11:15 UTC, USD/INR was trading 0.1% higher at 75.55. Today the Rupee has traded a range of 75.1 to 75.59.
RBI Makes Emergency Rate Cut
A broad risk off sentiment across global financial markets is dragging on the Indian Rupee at the start of the new week. Investors were not only selling out of the Pakistani Rupee, but also Indian equities. The Indian stock market came under heavy selling pressure with the Sensex dropping 1500 points in afternoon, trade. Weighing on demand for the Rupee is record withdrawal from foreign institutional investors this month.
On Friday the Reserve Bank of India cut interest rates by the most in a decade. The central bank slashed rates by 75 basis points from 5.15% to 4.44% at an emergency meeting on Friday. The RBI also announced steps to boost stimulus worth 3.2% of GDP, to cushion the blow of the coronavirus outbreak on the economy. However, there are growing concerns in the markets over how much ammunition the central bank has.
The move by the central bank came after relief measures worth 1.7 trillion rupees were announced by Finance Minister Nirmala Sitharaman and after a nationwide lock down was imposed.
Rating agency Moody’s cut India’s growth forecast by 2.5%, down from 5.3% for 2020 after the government ordered a nationwide lock down to curb the spread of coronavirus.
The number of coronavirus cases in India has reached 1,070.
Trump Extends Lock Down
The US Dollar is advancing across the board on Monday as investors seek its safe haven properties. Investors are growing fearful once again over the impact of coronavirus on the US economy after President Trump warned that the stay at home guidance will be extended until the end of April. Trump has said last week that the US would be open again for business as the end of Easter. However dire projections from his advisers have made him perform a U-turn.
