Rupee of India ends at a record low of 78.86/$. The forex market is staying volatile.
Against the United States dollar off late, the Indian currency has been volatile. Thus, on Thursday, it closed at an all-time low of 76.86 per dollar.
Economists have thoughts about it. They think that the weakness is significant because of the bleak outlook for the Indian economy. Moreover, it is amid coronavirus crisis and the subdued trade on the markets of stock.
Anuj Gupta works in DVP Commodities and Currencies Research, Angel Broking. He said that it is because of the lower India growth forecast. Moreover, it is also because there is a lower rate of interest in India. Foreign Institutional Investor was around $4.9 billion of Indian shares for far in March. That is the surpass of the 2008 figures.
He added that the upcoming IIP and GDP data might be lower in India. It is because of the lockdown and more moderate industrial activity in India. Thus, it reduces spending. Moreover, he adds, lower demand might also be the reason for the big tent on the Indian economy.
Nevertheless, Gupta said that the lower prices of crude and reasonable monsoon expectation might support the Indian economy further.
That volatility continues despite the reduction of trading hours in the forex market, interestingly. Nevertheless, the RBI on Thursday, said that the timings of the new market for the government bond and forex market would be maintained till April 30.
The Reserve Bank of India notified, earlier, that market activities include purchase and sales of G-secs will begin by 10 a.m. on April 7 and end at 2 p.m. on April 17. Thus, there is a bid to curb volatility.
The Reserve Bank of India said in a statement that because of the Government of India’s order that the lockdown will continue till May 3.
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