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The rupee hit a historic low of 75.30 as demand for the dollar spiked amid fear of a global recession due to the Covid-19 pandemic.
On Thursday, the Indian unit opened 74 paise weaker at 75 to the dollar vis-a-vis the previous close of 74.26. Persistent demand for the dollar saw it sink to 75.30 intraday.
The central bank is believed to have intervened at the 75.28/30 levels through nationalised banks to stem the rupee’s depreciation. It finally closed 86 paise lower at 75.12.
Referring to the intraday volatility of about 52 paise between the rupee’s high and low, a forex dealer said: “This reflects the uncertainty in the market triggered by the global outbreak of the coronavirus epidemic.”
According to Madan Sabnavis, Chief Economist, CARE Ratings, global factors such as the strong dollar and the pandemic have depressed most currencies and the rupee is not immune to this panic.
“The RBI has got into swap agreements with banks to sell dollars which should curb volatility to an extent. But we should be prepared for anything – even a further depreciation as the markets have become quite unpredictable,” he said.
Abhishek Goenka, Founder and CEO, IFA Global, observed that investors are pulling out funds from all financial markets and want to keep their money in dollar terms bcause of the prevailing uncertainties and recession fears.
“Today, due to regulatory intervention in the last 10 minutes through the futures segment, the rupee pared some losses,” he said.
Equity and bond market
The equity and bond markets continued to reel under the effects of the pandemic. The 30-stock benchmark index BSE Sensex closed at 28,288.23, down 2.01 per cent over the previous close. The other equity benchmark — the 50-stock NSE Nifty — ended at 8,263.45, down 2.42 per cent.
Yield on the benchmark 10-year Government Security (coupon rate: 6.45 per cent) jumped 11 basis points to 6.4097 per cent over the previous close of 6.2958 per cent. The price on this security dropped sharply by 81 paise to ₹100.28 against the previous close of ₹101.09. Bond price and yield move in opposite directions.
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