Rupee Falls 1.5%, Plunges To 74.47 Against Dollar Amid Rising Virus Cases

Rupee Vs Dollar Today: The rupee settled at 74.47 against the dollar

Suffering its biggest single-day fall in 20 months, the rupee plunged 105 paise against the US dollar on Wednesday, April 7, to settle at 74.47 (provisional), amid concerns over rising COVID-19 cases across the country. The local unit lost as much as 1.5 per cent in a single day as the Reserve Bank of India (RBI), in its Monetary Policy Committee review, maintained the status quo on the key policy rates for the fifth time in a row.  At the interbank foreign exchange market, the domestic unit opened at 73.52 against the American currency and traded in the range of 73.52 to 74.50 throughout the session.

The Reserve Bank also laid plans for a massive government bond-buying programme. The central bank maintained the repo rate –  the interest rates at which the RBI lends money to commercial banks, at four per cent, and the reverse repo rate – the rate at which RBI borrows money from banks, at 3.35 per cent. In an early trade session, the local unit fell 15 paise to 73.57 against the greenback. 

Meanwhile, the dollar index, which gauges the greenback’s strength against a basket of six peers, declined 0.06 per cent to 92.28.  Almost all the other Asian currencies gained, tracking the U.S. bond yields that continued to retreat, easing pressure on regional assets.

“The RBI policy was very interesting and it felt like a quantitative easing programme. The key take away is that the RBI will continue to maintain the ultra-loose monetary policy and infuse liquidity for a long time as Covid surge will keep imparting uncertainty to growth outlook. The RBI has reiterated that growth is the priority,” said Mr. Rahul Gupta, Head Of Research- Currency, Emkay Global Financial Services

”Also, CPI Q4 FY22 projection has been reduced to 5 per cent from 5.2 per cent earlier which means inflation will be moderated in the future, and this statement rules out any monetary tightening speculations. The forex market wasn’t expecting such a dovish stance and rupee got set on fire. The resistance in USDINR spot have become support as RBI intervention was missing,” he added.

On the domestic equity market front, the BSE Sensex ended 460.37 points or 0.94 per cent higher at 49,661.76, while the broader NSE Nifty climbed 135.55 points or 0.92 per cent to 14,819.05. ”The Reserve Bank of India delivered a dovish policy. As expected there was a status quo on the policy rates, and the stance was maintained as accommodative with special mention to retain the same to mitigate Covid impact,” said Sujata Guhathakurta, President and Business Head, Debt Capital Markets-Sales, Kotak Mahindra Bank.

”The G-SAP 1.0 is a very welcome move which the markets have been waiting since the last couple of months. The Rs 1 lakh crore purchase commitment in the first quarter of FY22 in addition to special OMOs, gives a lot of comfort and is exactly what the markets needed,” added Guhathakurta.

According to exchange data, the foreign institutional investors were net sellers in the capital market as they offloaded shares worth Rs 1,092.75 crore on April 6. Brent crude futures, the global oil benchmark, was trading 0.53 per cent up at $ 63.07 per barrel.

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