The Indian Rupee continues to trade near its all time low at the start of the new week. The Indian Rupee reached a record low of 176.4 last week. Today, at 11:15 UTC, USD/INR is trading at 176.2 on the open market.
Service Sector Contracts, Worse Yet To Come
The Rupee remains under pressure as the impact of the coronavirus outbreak on the Indian economy becomes clearer. Data showed that activity in India’s service sector contracted in March as the coronavirus outbreak dented demand, both in the overseas markets and domestically.
The IHS Markit India Services Business Activity Index dropped to 49.3 in March, down from February’s 85 month high of 57.5. The Figure 50 separates expansion from contraction. Economists at IHS Markit warned that the impact of the pandemic on India’s services had not been fully revealed yet. This is because the data was collected for the survey from 12th – 27th March, concluding as India’s Prime Minister, Narendra Modi, ordered the complete lock down of India.
India’s composite index, which tracks activity in both the manufacturing and service sectors, fell to 50.6 in March, down from 57.6 in February. The sudden slowdown in output has brought an abrupt end to the recent private sector expansion.
In India there are now more than 4000 coronavirus cases. The country started a three week lock down period on Wednesday 25th March. However, Modi’s government are already considering how to end the lock down as millions struggle to find food.
Safe Haven Trade Eases
The US Dollar has edged higher versus its major peers at the start of the week. However, its rally is showing signs of slowing as risk sentiments improves.
Some signs over the weekend that the coronavirus outbreak could be easing in the worst hit areas have put the global markets in a more upbeat mood on Monday. Italy and Spain have reported a fall in the number of coronavirus related deaths. Meanwhile the curve is starting to flatten for France and Germany. Even the US has experienced a slight slowdown in deaths and cases over the weekend, although it is unclear how sustainable this trend in the US will be over.
There is no high impacting US data today. Investors will remain focused on coronavirus statistics.
