The Indian rupee today hit a record low of 74.50 against the US dollar, breaching previous low of 74.48, hit in October 2018. The rupee has been sliding against the US dollar as emerging market currencies feel the heat of global risk-off sentiment. Financial markets globally are facing intense selling pressures on extreme risk aversion due to the spread of coronavirus infections and have caused a mismatch in dollar liquidity across the world, the Reserve Bank of India said in a statement on Thursday. The rupee had closed at 74.21 in the previous session.
However, the rupee later recovered to 74 against the US dollar later in the day, having traded in the range of 73.90 to 74.50 so far in the day.
Meanwhile, trading on BSE and NSE resumed after a temporary halt, triggered by circuit breaker limit, after Nifty slumped 10% in early trade.
“The panic in equities has not snowballed into currencies to the same extent,” IFA Global said. The Reserve Bank of India has done a good job of containing volatility so far, it added.
Traders expect the RBI to step in to prevent further sharp falls in the currency but don’t see it protecting the rupee at any particular level.
The RBI on Thursday announced that it will conduct sell/buy swaps in the foreign exchange market to ensure adequate dollar liquidity amid the current global rout in markets, with the first such swap for $2 billion to be held on March 16.
India has announced over 70 confirmed cases of coronavirus so far and on Wednesday said it will suspend the vast majority of visas to the country in a wide-reaching attempt to prevent the spread of coronavirus.
(With Agency Inputs)