The Indian Rupee is slipping versus the US Dollar amid broad greenback strength.
The Indian Rupee lost 1.4% of its value in the previous session closing at 76.40. USD/INR rate holds above 76.40 on Thursday as Indian markets are closed for Ram Navmi.
Indian Manufacturing Activity Drops to 4 Month Low
Demand for the Indian Rupee has weakened over recent weeks as coronavirus fears have seen investors sell out of riskier, emerging market assets and currencies in favour of safe havens, such as the US Dollar.
In addition to risk aversion, concerns over the direct impact of coronavirus on the Indian economy are also hitting demand for the currency. A heavy shock to the Indian economy is expected. With 1.3 billion people in lock down for a period of 21 days, the economy of the world’s second most populous country is grinding to a standstill.
Data has already shown that activity in India’s manufacturing sector expanded at the slowest rate in four months in March. This is only likely to get worse as demand and supply take a hit from the covid-19 outbreak. Output optimism fell to the lowest level since October 2015 and this is really only the beginning of the troubles that lay ahead.
US Jobless Claims Up Next
The US dollar is trading broadly flat versus its major peers, although it is advancing versus emerging market currencies, as risk sentiment remains low.
Investors will turn their attention to US initial jobless claims. Rewind back to last week and initial jobless claims shocked the markets with a record breaking 3.3 million people signing up for unemployment insurance. Today, analysts are expecting initial jobless claims to reach a fresh record of 3.5 million. Across the two weeks this would put initial unemployment claims at 6.5 million as the devastating impact of coronavirus on businesses, the labour market and the economy are revealed.
The number of coronavirus cases in the US is now over 216,000. As America shuts down, state by state, to slow the spread of coronavirus the number of people losing their job is only likely to increase.
Usually a high jobless claims figure would weigh on the value of the Dollar. However, in today’s coronavirus climate a high claims figure could dampen risk sentiment further, boosting demand for the safe haven Dollar.
