The rupee hit a new low against the dollar as it dropped to 76.87 on Thursday amid concerns of a delay in economic revival following the spread of COVID-19.
After opening at 76.75 a dollar as compared with Wednesday’s closing of 76.44, the rupee slipped to 76.87 per dollar at close of day, depreciating 43 paise, or 0.56%, on Thursday. The domestic unit weakened with the dollar strengthening against various currencies.
According to dealers, the rupee will continue to be under pressure till signs of the pandemic peaking emerge. The government has now extended the nationwide lockdown, which started on March 25, by another 18 days to May 3, with stricter restrictions.
Currency traders see the rupee slipping to 77.50 to a dollar in the near term. The central bank has not been aggressive in stemming the rupee depreciation, dealers said. “Rupee traded weak again as we enter the second day of the second lockdown, wherein the rules have become stringent. There is volatility in dollar-index trading. Rupee shall keep trading weak on the back of higher gold prices, along with a slowing economy,” said Jateen Trivedi, senior research analyst (commodity and currency) at LKP Securities.
Rating agency Moody’s said some firms in south and southeast Asia could be vulnerable to the dollar’s surge.
“Depreciation of the Indonesian rupiah and Indian rupee increases risks for some companies with currency mismatches and heavy reliance on U.S. dollar debt,” it said in a research note.
