The rupee depreciated 9 paise to close at 75.72 against the US dollar on Wednesday, the 6th of May. It had been followed by a strong American currency overseas and concern of a revived trade war between the US and China.
“The weakness in the rupee was largely due to the strengthening of the US dollar and sustained foreign fund outflows.”, said Forex traders.
The unprecedented situation, with the coronavirus spreading expeditiously, also weighed on the local unit. The outbreak of COVID 19 has been affecting the economy worldwide.
The industry body Ficci and tax consultancy Dhruva advisors jointly conducted an industry survey recently. They managed to take responses from about 380 companies across the sectors. It can be very well said that businesses are grappling with “tremendous uncertainty” about their future.
According to the conducted survey, COVID-19 is having a ‘deep impact’ on Indian businesses, over the coming month’s jobs are at high risk because firms are looking for some reduction in manpower. Further, it is added that already COVID-19 crisis has caused an unprecedented collapse in economic activities over the last few weeks.
At the interbank forex market, the rupee opened the weak at 75.77 against the US dollar. It then cut down some losses to finally settle at 75.72 against the US dollar.
“The risk tone has been tepid and will remain like that on renewed US-China spat. The trade war can reignite going ahead and prop up the safe haven dollar demand. Also, coronavirus cases are increasing, stocking fears of second wave of infection. Locally, there are concerns over macros, due to the extension in lockdown, India’s GDP is expected to fall near 1 per cent. While, market is eagerly waiting for more stimulus measures from the government,” said Rahul Gupta, Head of Research- Currency, Emkay Global Financial Services.
According to provisional exchange data, Foreign institutional investors remained net sellers in the capital market, as they sold equity shares worth Rs 1,059.39 crore on Tuesday, the 5th of May. The dollar index, which gauges the greenback’s strength against a basket of six currencies, rose by 0.40 per cent to 100.10.