The rupee fell sharply against the US dollar today in line with a selloff in domestic equity markets. The rupee inched closer to 76 per US dollar after it fell to 75.97 at day’s low before setting at 75.91. The rupee had closed at 75.58 in the previous session. So far this year, the rupee is down about 6.5% against US dollar, hitting a low of 76.91 earlier this year.
Risk sentiment was weak as the fiscal stimulus package failed to enthuse investors. The government on Sunday extended the coronavirus lockdown for two more weeks with the fourth phase providing more relaxations outside the containment zones.
The Sensex fell over 1,000 points at day’s low. Foreign institutional investors were net sellers in the capital market, as they sold equity shares worth ?2,388.04 crore on Friday.
Rushabh Maru, research analyst at Anand Rathi Shares, said: “The rupee is under pressure as the market is disappointed over the stimulus package announced by the government. Weakness in the domestic equities market has pressurized the rupee. Performance of India’s key macroeconomic data has deteriorated significantly. On the other hand, global financial markets have turned volatile due to growing possibility of second wave of the coronavirus. The tension is rising between the US and China as the later failed to contain the pandemic. Hence the rupee may remain under pressure in the near term.”
Meanwhile, the dollar index, which gauges the greenback’s strength against a basket of six currencies, was flat at 100.407.
Brent crude futures rose to $33.58 a barrel as demand picked up as countries around the world eased travel restrictions
In India, the death toll due to COVID-19 rose to 3,029 and the number of cases climbed to 96,169, according to the health ministry.
Goldman Sachs economists expect India’s real GDP to fall by 5% in the 2021 fiscal year, which would be deeper than any other recession India has ever experienced.
A nearly two-month-long nationwide lockdown has hit India’s trade, which has been on a declining trend due to a slowing economy.
“An extremely weak set of April external trade data reflected the stress in the domestic and global economy owing to the lockdowns. Few sector such as pharmaceuticals and chemical products were relatively immune.With growth remaining weak and low oil prices, we continue to estimate FY2021E CAD/GDP at 0%. We expect USD-INR between 74-77.5 in the near term,” Kotak Securities said in a note.
News source:- livemint