The rupee hit a fresh low on Monday, breaching the 76-to-a-dollar mark, amid the spread of COVID-19 across the country that has prompted several States to call for a shut down.
The rupee opened weaker at 75.69 against the dollar, compared with its previous close of 75.20. The rupee hit the day’s low of 76.33 before closing the day at 76.20 a dollar, down 100 paisa, or 1.33%, from its previous close.
“The pandemic is causing widespread lockdowns, causing the economy to grind to a halt. In such a situation, emerging market currencies are vulnerable due to their dependence on dollar debt. A scramble for dollars would continue as long as the panic lasts,” Anindya Banerjee, DVP, Currency Derivatives and Interest Rate Derivatives at Kotak Securities, said.
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Mr. Banerjee said the RBI would continue to sell dollars aggressively, but that may not stop bleeding by the rupee, which could head to 78-a-dollar levels.
“Over the next couple of weeks, there is growing risk of USD-INR inching towards 78 levels on spot. Technically, USD-INR needs to respect the 74.50 level, the previous all-time high, to keep the bullish bias alive,” he said.