Rupee slips past 74 against U.S. dollar on weak equities, coronavirus-led slowdown fears

At the interbank foreign exchange market, the local currency opened at 73.99

The rupee on Monday slipped past the 74-level against the U.S. dollar to settle at 74.14 (provisional), down 27 paise tracking heavy selling in the domestic equity market amid rising concerns over the novel coronavirus-led economic slowdown.

Forex traders said the rupee depreciated versus major trading currencies as a collapse in oil prices added to a risk off sentiment caused by the relentless spread of the virus (COVID-19) across the globe.

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At the interbank foreign exchange market, the local currency opened at 73.99. During the day, it saw a high of 73.85 and a low of 74.17.

The Indian currency finally settled at 74.14, lower by 27 paise against its previous close.

The domestic unit had settled at 73.87 against the American currency on Friday.

“The sharp underperformance of INR was a reminder that there are no real safe havens in high-yielding emerging market forex. INR seems to have over-reacted to confirmation of COVID-19 infections while news of the RBI being forced to rescue a big private sector bank did not help,” said Rajesh Cheruvu, Chief Investment Officer, Validus Wealth.

In their biggest ever single-day drop in absolute terms, the BSE Sensex crashed over 1,941 points and the NSE Nifty tumbled 538 points with no let-up in the COVID-19 spread and a massive crude oil plunge also fuelled global recession fears.

Besides, both indices also marked their biggest intra-day fall of all-time.

Also read| How is India containing COVID-19?

Benchmarks Sensex and Nifty slumped intra-day 2,467 points and 695 points, respectively.

At the closing bell, the 30-share Sensex was down 1,941.67 points or 5.17% at 35,634.95 — the lowest level in about 13 months.

The broader Nifty settled at 10,451.45, dropping 538 points or 4.90%.

Meanwhile, crude oil prices were in a free fall, plunging nearly 30% to $32.11 per barrel after top exporter Saudi Arabia launched a price war in response to a failure by leading producers to strike a deal to support energy markets.

Brent crude futures, the global oil benchmark, was trading 21.23% down at $35.66 per barrel.

“Oil markets crashed more than 30% after the disintegration of the OPEC+ alliance triggered an all-out price war between Saudi Arabia and Russia that is likely to have sweeping political and economic consequences,” said V.K. Sharma, Head PCG & Capital Markets Strategy, HDFC Securities.

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