USD/INR, Indian Rupee fell by 30 paise to 76.83 as Indian markets weakened and US market strengthened overseas. During the session, INR was highly volatile and it hit a high of 76.62 before settling for 76.83. USD bolstered due to oil prices dropping and pressure on oil linked currencies.
Experts believe that INR and Indian market fell because of crude oil. Equity market could not cope with the tumbling and dropping of oil prices.
Crude Oil Hits Historic Low
Due to decrease in oil demand, for the first time US crude futures displayed negative returns. The demand for oil collapsed to minimal as people across the globe stayed home for safety against Coronavirus spread.
US President informed oil drop as short-term and asked its administration to stop import of oil from Saudi Arabia to lift up the market.
India can benefit from low oil prices being the top importer of crude oil. Indian PM, Mr. Narendra Modi can reap the benefit of oil price drop and can heal the Indian market from the damage caused by spread of Coronavirus.
INR could strengthen against USD in long term if India buys enough oil at these low prices.There being no demand of oil, producers and sellers are forced to stock up the production.
USD/INR Impact of Coronavirus
Coronavirus cases in India crossed 20,000 today as death toll increased to 651. Coronavirus cases seem to increase by an average of 1500-1700 cases on daily basis in India. With minimal production and economic activity in India INR may further fall against USD. While dealing with the health crisis India hopes to restart the businesses to uplift the Indian economy.
High investment in Gold
Investors look for a safe option during this crisis period and opt for investment in Gold being it a safe and secure investment with an uplifting future. Gold future predicts an increase of 0.16% to Rs. 45,787/10 grams till 5th June, 2020.
Spot gold markets being shut due to lockdown. Gold prices may drop further due to weak consumption by retail and USD strengthening.
USD/INR may continue its volatility throughout this week. INR may further weaken as Coronavirus cases increase in India.