The Indian rupee has turned from Asia’s best-performing currency in the previous quarter to the worst in the past weeks, falling past 75 as it closed on Friday, 23 April.
India’s currency mayhem is playing it out as the country witnesses consecutive record daily cases for the past week and overtakes Brazil as the second worst-hit COVID country. India reported 3,32,740 cases on 23 April.
The rupee has been edging low everyday, since 6 April, where it fell below 73.42 against the US dollar, then at 74.47 on 7 April, 74.58 on 8 April, and then 74.73 on 9 April.
Market sentiments were up when the Centre announced its fourth phase of vaccination drive, where anyone above the age of 18 was now eligible for vaccination. However, with the country reporting over 2 lakh cases every day sine the past two weeks, the rupee fell closer to 74.88 on 20 April.
Federal Bank Ltd expects it to fall further to 76 by year-end. The currency’s slide may be exacerbated by unwinding of short dollar positions against the rupee, which ICICI Bank Ltd estimates has grown to $50 billion.
According to the Bloomberg Quint, all other countries in Asia have posted positive returns, except China, which lost about 0.4% after the stumble by China Hearing Assent Management Co.
With only one company settling a note this month, the surge in COVID cases in the country and lockdown restrictions in several states is also making borrowers hesitate to tap what would be some of the lowest borrowing costs ever in the dollar bond market.
“Pandemic-induced currency volatility is making it difficult for borrowers to assess their foreign debt costs,” reported Bloomberg Quint, quoting Abhishek Goenka, founder of IFA Global.
According to a Bloomberg report, the rupee slumped 2.6% against the dollar so far in April after falling 0.1% in the quarter ended on March.
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