Business Standard

Rupee plunges 63p to nearly 6-month low as COVID-19 spreads around globe


Press Trust of India Mumbai
The rupee on Friday plunged by 63 paise to settle at nearly six-month low of 72.24 against the US dollar, tracking heavy sell-offs in equities and sustained foreign fund outflows on fears that coronavirus can wreak havoc on the global economy.
At the interbank foreign exchange market, the local currency opened lower at 71.90 to the US dollar and hit a low of 72.29 in day trade.
The domestic currency finally settled at 72.24, showing a loss of 63 paise -- the biggest single-day loss since September 13, 2019. The closing level is the lowest since September 3.
"This week was all about coronavirus. The focus was on contagion to new regions outside China. The outbreak of virus rattled the risk appetite, giving rise to risks of sharp global economic slowdown," said Rahul Gupta, Head of Research- Currency, Emkay Global Financial Services.
The virus has now spread around the globe prompting many governments issue advisories against travelling or gathering in crowded places.
An analyst observed that the coronavirus has definitely hit businesses and could have longer than anticipated effect on global growth and earnings.
China reported 44 more deaths from the novel coronavirus epidemic on Friday and 327 fresh cases. The death toll now stands at 2,788 in mainland China, according to the National Health Commission.
"The panic selling of foreign investors in Indian equities has led to rupee depreciation. Now that the big hurdle of 72 is crossed in USDINR pair it can take 72.50 as next level on upside," Jateen Trivedi, Senior Research Analyst (Commodity & Currency) at LKP Securities.
Continuing its downward spiral for the sixth straight session, the 30-share BSE Sensex ended 1,448.37 points, or 3.64 per cent, lower at 38,297.29.
This was the benchmark's second-worst drop in absolute terms after August 24, 2015, when it had plunged 1,624.51 points.
Similarly, the broader NSE Nifty sank 431.55 points or 3.71 per cent to end at 11,201.75.
Market participants were also cautious ahead of the release of third quarter GDP number, traders said.
On a weekly basis the domestic currency has lost 56 paise.
The global crude oil benchmark Brent futures fell 1.97 per cent to trade at USD 51.15 per barrel.
Meanwhile, easing crude oil prices and weakening of the American currency in the overseas market supported the rupee, traders said.
Meanwhile, foreign institutional investors remained net sellers in the Indian capital markets, offloading equities worth a net Rs 1,428.74 crore on Friday, according to provisional exchange data.
The dollar index, which gauges the greenback's strength against a basket of six currencies, slipped 0.18 per cent to 98.33.
The 10-year Indian government bond yield was at 6.37 per cent.
The Financial Benchmark India Private Ltd (FBIL) set the reference rate for the rupee/dollar at 71.6124 and for rupee/euro at 78.1692. The reference rate for rupee/British pound was fixed at 92.6273 and for rupee/100 Japanese yen at 65.06.

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First Published: Feb 28 2020 | 9:26 PM IST

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