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Rupee in free fall on COVID-19 fears
Rupee in free fall on COVID-19 fears
- The rupee fell for the third consecutive session on Tuesday on concerns over the deadly COVID-19 spreading in India.
More in the news
- The rupee dropped below the 73-a-dollar level.
- The rupee opened stronger at 72.45 a dollar compared to its previous close of 72.76, but weakened after reports of the COVID-19 spreading in India.
- RBI stepped in:
(1) RBI issued a statement saying the central bank was closely monitoring the situation and stood ready to take appropriate action.
(2) RBI acknowledged that the spillover of the global financial market turmoil in India had been largely contained as there were hopes of coordinated policy action.
- Impact on exports:
(1) Since India and China are major trading partners, a sharp hit to their exports and imports is likely.
(2) China’s economic growth is likely to moderate to below 6% in 2020.
(3) Export of commodities like ores (India exports 72% of its total ores to China), organic chemicals, cotton, etc. is likely to get hit should the disruption from the COVID-19 continue for an extended period.
Source
The Hindu.