The Indian rupee plunged to a 16-month low to trade at 73.56 against US dollar in trading hours on Wednesday, on rising concerns on the coronavirus-led slow down on economy and industry.
This is the third consecutive day of fall for the Indian currency during which it has depreciated by about 160 paise.
Rupee exchange value against UAE dirham (AED) also crossed 20 on Wednesday to trade at 20.01 in noon trading hours.
Currency market analysts predict rupee weakening to even 75 against the greenback in the short-term, as the impact of Covid-19 on economic growth seemed to be more serious than what has been thought so far.
“The Fed Reserves’ action in cutting rate overnight has raised more questions than cooling down frayed nerves,” Ajay Kedia, managing director of Kedia Commtrade and Research, told Arabian Business.
“This (Fed Reserve’s action), read with sound bytes emanating from various other global financial agencies, is being interpreted by the market as an indication that the Covid-19-induced slow down could be much more severe than what is already factored in,” Kedia said.
A falling rupee is good news for NRIs (non-resident Indians) for remittances to their home country. Gulf-based expat Indians account for a major share of NRI remittances to India.
Significantly rupee’s plunge on Wednesday was after it opened 22 paise higher at 73.07 per dollar as against previous day’s close of 73.29. Market analysts were attributing the rise in rupee value in the morning trading hours as a response to the rate cut by Fed Reserve.
On Tuesday rupee ended at 73.29 against the US dollar, as investor sentiment remained fragile amid concerns over the impact of coronavirus.
The US Federal Reserve cut interest rates on Tuesday by 50 basis points in a bid to shield the world’s largest economy from the impact of the coronavirus.
But the emergency move failed to comfort global financial markets, roiled by worries about a deeper, lasting slowdown.
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