On Tuesday rupee slipped 47 paise to 73.23 against the US dollar, as investor sentiment remained fragile amid concerns over the impact of coronavirus.
The Indian rupee extended losses and touched 16-month low as it surpassed 73.50 level. Meanwhile, it is trading at day's low level at 73.56 per dollar amid selling seen in the domestic equity market.
It opened 22 paise higher at 73.07 per dollar versus previous close of 73.29.
On Tuesday rupee ended at 73.29 against the US dollar, as investor sentiment remained fragile amid concerns over the impact of coronavirus.
This is the third consecutive session of fall for the domestic currency during which it has depreciated by 160 paise.
The Sensex was down 168.22 points or 0.44% at 38455.48, and the Nifty was down 40.80 points or 0.36% at 11262.50.
The US Federal Reserve cut interest rates on Tuesday in a bid to shield the world’s largest economy from the impact of the coronavirus, but the emergency move failed to comfort US financial markets roiled by worries about a deeper, lasting slowdown.
The dollar fell to a five-month low versus the yen after an emergency 50 basis point cut in interest rates by the US Federal Reserve was deemed insufficient to offset downside risks posed by the global spread of the coronavirus.
"Rupee opened with some gains near 72.50 but that was just about it at the opening, as heavy selling was witnessed in rupee after positive opening. The panic of corona plays into our domestic market as well as the global front which has forced the funds outflows. The next important level for rupee now is 73.25-73.30 which can be tested in coming days," said Jateen Trivedi, Senior Research Analyst (Commodity & Currency) at LKP Securities.
Gold prices rose after surging more than 3% in the previous session as the US Federal Reserve cut interest rates to help soften the economic blow from the coronavirus outbreak.
Oil prices also rose more than 1% on expectations that major producers have moved closer to an agreement to enact deeper output cuts aimed at offsetting the slump in demand caused by the coronavirus outbreak.
"In a surprise out of policy move, the US Federal Reserve has cut the overnight Federal funds rate by 50bps. The next FOMC rate decision is due on 18th March. This could have been what the global central bankers would have decided in today's meet of G7 central bankers and finance ministers. Since the rate cut was priced in to a large extent we are seeing some of the initial moves fade," said Abhishek Goenka, Founder & CEO, IFA Global
"The rupee offshore points have cooled off post the announcement. The NDF implied spot is at 72.90 currently. Coordinated action of global central bankers brings back memories of the historic plaza accord of 1985 when major central banks agreed to let the USD weaken to spur one of the biggest engines of global growth. However, how effective a monetary policy action could be in times like these is debatable. It may do little to stabilize the real economy if Coronavirus induced disruptions exacerbate. It may ensure a speedy recovery to normalcy if the virus relents," he added.Subscribe to Moneycontrol Pro's Annual plan for Rs 399/- for the first year. Use coupon PRO2020 (Available on Web & Android only).
