The rupee tumbled past the 75-to-a-dollar mark on Thursday for the first-time ever as foreign investors continued to pull out of emerging market economies following the spread of COVID-19 that has put global economic growth at risk.
The rupee opened weak at 74.96 to a dollar compared with the previous close of 74.26 and went on to hit 75.31 a dollar. Currency dealers said state-run banks had been spotted intervening on behalf of the central bank, helping the currency stem losses.
The rupee closed the day at 75.10, down ₹0.84 or 1.13%. The currency has lost almost 3% against the greenbackdollar this month. The rupee weakened despite the sharp fall in oil prices over the last few days and a narrowing current account deficit. The U.S. Dollar index surged 1.6% to a three-year high of over 100.
“The rupee remains under tremendous pressure given the fallout of COVID-19Similarly, various emerging market currencies are bearing the brunt of foreign capital outflows from equity and debt markets. Meanwhile, the U.S. dollar continues to power higher against the basket of currencies as global financial markets remain very unsettled,” said Hitesh Jain, lead analyst, Yes Securities.
“On the rupee outlook, we sense that volatility will persist unless the adverse impact of the pandemic on the global financial markets abates. We see the rupee in the range of 74-76 for the next 1-2 months,” he added.
The weakness in the currency market spilled over to the bond market with the yield on the 10-year government bond jumping 11 bps to 6.41%. Bond yields hardened despite the RBI saying it would buy bonds worth ₹10,000 crore on Friday, a move aimed at managing yields.
