Indian rupee touches all-time low of 21.05 against UAE dirham

The Indian rupee touched an all-time low against the dirham of Dh21.05 as the currency remained under massive pressure amid a significant rise in coronavirus cases in the country and weak domestic equities.

Forex traders said heavy selling in domestic equities dragged the local unit amid mounting fears of a coronavirus-led economic slowdown.

The currency settled 53 paise lower at 76.13 (provisional) against the US dollar on Friday. Moreover, strengthening of the US dollar in the international market continues to weigh on the Indian currency.

Vijay Valecha, chief investment officer, Century Financial, said: “Indian Rupee touched an all time low against dirham as the currency continues to remain under pressure with the latest March PMI for service sector indicating economy clearly slipping into contraction.”

The IHS Markit India Services Business Activity Index dropped to 49.3 in March, down from February’s high of 57.5. The composite index fell to 50.6 in March from 57.6 in Feb. India which has currently over 4000+cases is likely to extend its lock down beyond the April 15 deadline. This is likely to inflect further pain for the economy which is already suffering owing to coronavirus related de-growth.

“For informal economy like India, the costs are especially huge with majority of the rural population surviving on daily wage income for livelihood. Overall dollar strength against major G4 currencies is another factor that is negative for emerging market currencies,” added Valecha.

Forex markets in India were closed on April 1 for the annual closing of banks and on April 2 on account of Ram Navami. On a weekly basis, the currency has depreciated by 124 paise. “Rupee remained under pressure following broad strength in the dollar and as FIIs continue to remain net sellers in the equity and debt segment,” said Gaurang Somaiyaa, Forex & Bullion Analyst, Motilal Oswal Financial Services.

The Indian rupee appreciated by 26 paise to 75.87 against the US dollar in early trade on Tuesday tracking positive opening in domestic equities. Forex traders said higher opening in domestic equities supported the local unit, while sustained foreign fund outflows and concerns over coronavirus outbreak weighed on the local unit. At the interbank foreign exchange the rupee opened at 75.92, then gained ground and touched 75.87, registering a rise of 26 paise over its previous close.

On Friday, rupee had settled at 76.13 against the US dollar. Traders said investor sentiments remain fragile amid concerns over the impact of coronavirus outbreak on the domestic as well as global economy. The number of deaths around the world linked to the new coronavirus has crossed over 74,000. In India, over 4,400 coronavirus cases have been reported so far.

Foreign institutional investors (FIIs) remained net sellers in the capital market, as they sold equity shares worth Rs19.6 billion on Friday, according to provisional exchange data. Meanwhile, the dollar index, which gauges the greenback’s strength against the basket of six currencies was trading 0.13 per cent down at 100.55.

“The rupee is presently on a bearish phase and this short term trend is likely to continue in the near future till such time the economic lockdown is lifted. In the near term rupee is likely to be in the range 20.75 – 20.85 levels,” said Krishnan Ramachandran, CEO, Barjeel Geojit Securities.

The dollar fell against the yen on Tuesday as US stock futures erased gains and traded lower in a sign some investors remain concerned about the economic shock posed by the coronavirus pandemic. The dollar fell 0.32 per cent to 108.89 yen in Asia on Tuesday. Against the euro, the dollar eased slightly to $1.0805. Against the save-haven Swiss franc, the greenback held steady near a two-week high of 0.9796.The dollar came into Asian trade on a positive note as risk sentiment improved after the governors of New York and New Jersey pointed to tentative signs that outbreaks in their states was starting to plateau.

The pound rose 0.17 per cent to $1.2294 on Tuesday in Asia following a 0.3 per cent decline on Monday. Against the euro, sterling held steady at 88.13 pence. The yen edged higher against the euro and held steady against the antipodean currencies, but analysts cautioned against reading too much into the yen’s rise because volumes are falling as more traders and corporate customers work from home.

The Australian dollar edged up 0.5 per cent against its U.S. counterpart, while the New Zealand dollar also rose 0.5 per cent against the greenback as investors felt more comfortable buying currencies sensitive to risk The Reserve Bank of Australia is expected to keep policy on hold at a meeting today after it already slashed interest rates and embarked on quantitative easing.

With inputs from PTI, Khaleej Times, Reuters