The Indian Rupee as advancing versus the US Dollar for the fifth consecutive session on Tuesday. At 11:15 UTC, USD/INR is trading at 75.54, -0.5%. This is towards the lower end of the daily range of 75.52 – 75.98 as global risk sentiment improves on easing coronavirus cases.
Indian GDP Could Slip Below 3%
The Indian Rupee is strengthening even as Indian leaders are hesitating of whether to end the lock down in the country. The 21-day lock down to slowdown the spread of coronavirus started on 25th March and id due to end next week. However, several state leaders have called for an extension, or at least just a partial lifting of the restrictive measures amid fears that a coronavirus pandemic in India would be too difficult to tackle.
By shutting down its $2.9 trillion dollar economy, Indian has so far escaped a surge in the number of coronavirus cases. However, the very measures that are protecting the 1.3 billion population has also left millions without work.
Prime Minister Modi is due to take a decision on whether to extend the lock down this week. The countrywide lock down is expected to have a sizeable impact on the economy.
KPMG India warned that India’s GDP growth could slip below 3% if the lock down is continued beyond the initial 21-day period and if lock downs across the globe are prolonged. Under this scenario India would experience a double hit, bearing the brunt of a sharp decline in both domestic and global demand.
On a more positive note, KPMG also observed that some global economies could adopt a de-risking strategy moving forwards. This would involve moving their manufacturing bases from China, creating opportunities for India.
Safe Have Demand Falls
Whilst the US Dollar was trading lower across the board on Tuesday as risk sentiment across global financial markets improved. Demand for the safe haven dollar declined whilst riskier assets were in demand as coronavirus cases showed signs of levelling off in Europe and New York. US stock markets soared 7% in the previous session and are due to jump a further 3.5% on the open today.
There is no high impacting US data due for release today. Investors will remain focused on coronavirus statistics.