The Indian Rupee is falling sharply on Wednesday against the US Dollar. After opening at 75.81, the Rupee fell to 76.36, close to its all time low versus the US Dollar. The Indian Rupee is down 7% versus the greenback so far this year.

A Targeted Approach To Ease Economic Distress

A rising global death toll from coronavirus has dented risk sentiment across the financial markets on Wednesday. Optimism is fading that the covid-19 crisis in Europe and the US is slowing, hitting demand for riskier assets as investors seek shelter in safe havens.

Globally the number of coronavirus cases has surpassed 1.4 million. In India there have been 5000 confirmed cases to date. Indian has been on lock down since 25th March to contain the spread of the virus. Approaching the end of the 21-day lock down period, the plan forward and how to reopen the economy are expected to be key drivers of risk sentiment. The lock down has caused large scale economic distress. However, there is a fine balance to be struck between easing restrictions and risking a second wave of infections.

One proposed exit strategy is to seal off coronavirus hotspots in Delhi, Mumbai and parts of the south, whilst easing the restrictions elsewhere. Given that some parts of Indian have seen no coronavirus cases, a more targeted approach could be the most appropriate.

USD Rises As Death Toll Jumps

The US Dollar is advancing on Wednesday owing to its safe haven properties. Whilst earlier in the week investors had been optimistic that coronavirus cases were levelling out. Today’s data indicates this is not the case. A new report by the Imperial College London also revealed that US, France and three other countries are projected to record at least 5000 deaths each in the coming week. UK, Spain and Italy are projected to experience a large death toll.

With numbers like these expected, the lock downs are likely to be maintained for a considerable time yet. The longer the lock down, the greater the hit on these economies. This is creating a risk off climate.

Today US Dollar investors will also look towards the release of the minutes from the Federal Reserve monetary policy meeting in March.