Rupee hits record low against the US dollar

The rupee on Friday hit a fresh record low of 74.48 against the US dollar following sharp sell-off in domestic equities and strength in the greenback against its major crosses.

The local currency, however, opened 17 paise down at 74.39 against the previous close of 72.22 against the dollar.

In order to curb further weakness for the rupee, RBI on Thursday announced that it will undertake a six-month sell/buy swap to provide liquidity to the foreign market. The first sell/buy swap auction involving $2 billion will be held on Monday; the first move following financial markets in India and across the globe experiencing turbulence over the spread of Covid-19, which could lead to a slowdown in growth.

Rupee also remained under pressure as FIIs continued to sell domestic equities and debt. In this month, until now FIIs have sold over $4billion including both equity and debt segment.

“Today, USDINR pair is expected to quote in the range of 74.20 and 75.20,” brokerage Motilal Oswal Financial Services said.

Euro and Pound both remained under pressure in the last couple of sessions following broad strength in the dollar. Yesterday, the ECB announced yet another stimulus package to help fight off the coronavirus pandemic.

As part of its measures, the ECB will provide banks with loans at a rate as low as minus 0.75 per cent, below the -0.5 per cent deposit rate and so essentially a rebate, and increase bond purchases by 120 billion euros this year, with a focus on corporate debt.

In a move to stem a market meltdown the Federal Reserve offered $1.5 trillion in short-term loans that could point to more aggressive action from the central bank in coming days to stimulate the economy and stabilize the financial system.

For today, market participants will be keeping an eye on consumer sentiment numbers and weaker-than-expected economic data could curb strength in the dollar.