Today Indian Rupee weakened today to an all-time low of 76.87 (provisional) per US Dollar. USD/INR may plummet further as massive foreign investment withdrawal continues amidst volatile and uncertain market during lockdown. Finally, USD/INR settled at 76.78 at the end of the trading hours.
Lockdown’s Significant Impact on Weakening of INR
SBI report states that the extension of the lockdown would result in economic loss of INR 21.1 lakh crore or 6% on Gross Value Added (GVA). India’s GDP growth can slide to 1.1% in the current financial year, on account of the outbreak of coronavirus pandemic on the economy.
Current Account Deficit to End Surplus
INR can get a little relaxation from volatile market flows during the year as crude prices fall below USD 20 per barrel. This can help turn India’s current account deficit to positive in financial year 2021. Exports expected to decrease by 16% at USD 265 Billion, resulting in an output loss of USD 50 Billion. However, imports expected to fall by 25% at USD 350 Billion, thanks to falling crude prices. Crude oil alone accounts for over 20 per cent of India’s merchandise imports.
Shorter Time for Trading
In view of the government of India’s order that the lockdown will continue to be in force till May 3, 2020, it has been decided that the amended trading hours for various RBI regulated markets will continue to be effective till the close of business on Thursday April 30, 2020,” the RBI confirmed in a press release.
As per the revised timings by RBI, regulated market will open at 10 am instead of the earlier 9 am. The closing timings have been revised to 2 pm. In addition, May 1st, 2nd and 3rd will be bank holidays.
US and Australia Unemployment Data May Impact USD/INR
US retail deals saw a record fall in March and April, with output at plants dip strongly as the coronavirus count increased to 641,166 in the US. One splendid information was of Australia’s unemployment data that increased to 5.2% below what experts predicted at 5.4%.
Investors now look with fear as week-by-week the US jobless petitioners increase. This arrangement has seen 20 million added to the unemployment account because of business lockdown owing to Coronavirus.