The Indian Rupee is edging cautiously higher versus the US Dollar at the start of the new week, extending gains from the previous week. Last week the Indian Rupee rallied 0.7% to close on Friday at 75.75.
At 11:30 UTC, USD/INR was trading -0.2% lower at 75.61. This is towards the lower end of the daily traded range 75.57 – 75.81, as investors weigh up a partial easing of the lockdown measures and a record decline in manufacturing activity.
Manufacturing Output Dives At Fastest Rate On Record
Data revealed that India’s manufacturing activity slumped to a record low in April amid the ongoing coronavirus lockdown. The same measures which stemmed the spread of coronavirus brought business activities in India to a near standstill.
The IHS/Markit manufacturing purchasing managers index (PMI), a closely watched report, declined to 27.4 in April, sharply down from 51.8 in March. The level 50 separates expansion from contraction. April’s reading was the steepest decline in business conditions since records began 15 years ago.
With business closed owing to the lock down, not just in India, but globally, demand dried up. New orders fell for the first time in two and a half years and at the fastest pace on record. The employment component of the report also highlighted the severity of the hit to the sector as the fall in employment occurred at the quickest pace on record.
The figures are indicating that the downturn in the sector is far deeper than that of the financial crisis. However, with lockdown measures partially easing today, the is a good chance that the April data will mark a bottom for the PMI data.
India has extended its lockdown by 2 more weeks until the 17th May. The government has graded the country in zones, red, orange and green. As from today some economic activity and movement of people will be allowed according to zones. The news is being well received after the lockdown has had a detrimental effect of the already declining economy.
The IMF expect the Indian economy to grew by 1.9% in 2020, down from estimates of 5.8% in January. Rating agency Moody’s slashed India’s growth forecast for the year to just 0.2%.
