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Coronavirus: Rupee plummets 100p to all-time low of 76.20

Most emerging Asian currencies fell sharply on Monday as investors continued hoarding dollars in a bid to stay liquid amid a worsening coronavirus epidemic.

By: ENS Economic Bureau | Mumbai | Published: March 24, 2020 12:22:58 am
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The rupee on Monday dived by 100 paise to settle at an all-time low of 76.20 against the US dollar as the stock market witnessed a sell-off and dollar rallied abroad amid a sharp surge in coronavirus cases in India.

Most emerging Asian currencies fell sharply on Monday as investors continued hoarding dollars in a bid to stay liquid amid a worsening coronavirus epidemic.

The huge outflow of over Rs 1,00,000 crore from the equity and debt markets has put severe pressure on the rupee, forex traders said. Market participants are worried that the sharp rise in coronavirus cases, which has crossed over 400 in the country, could weigh on the economy. The rupee which opened on a weak note at 75.90 saw a high of 75.86 and a low of 76.30.

The rupee had settled at 75.20 against the US dollar on Friday.

According to analysts, the uncertainty over coronavirus has triggered a flight to safety. “There is a scramble for US dollars. US treasury yields have dropped on account of risk aversion. Asian and emerging market currencies are weaker by 0.5-1 per cent against the US dollar. Investors would be watching closely as India enters a crucial phase. Next couple of weeks would be extremely critical in terms of how the infection spreads,” said an analyst from IFA Global Research.

Explained

Scramble for dollars

Despite the recent easing of measures by the Fed, the dollar has maintained its strength as the uncertainty around the virus and its impact has accelerated the flight to cash and pushed investors to liquidate holdings across asset classes. FPIs are already on the exit mode in India.

According to market sources, the RBI would have to continue to ensure ample liquidity.

“There is a scramble for US dollars. US treasury yields have dropped on account of risk aversion. Asian and emerging market currencies are weaker by 0.5-1 per cent against the US dollar. Investors would be watching closely as India enters a crucial phase. Next couple of weeks would be extremely critical in terms of how the infection spreads,” said an analyst from IFA Global Research.

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