Dubai - Currencies across Asia have also been under severe pressure.
Published: Wed 11 Mar 2020, 7:13 PM
The currencies of India and Pakistan will continue to witness increased volatility in the coming days as global economic concerns and the possibilities of a further plunge in financial and oil markets deepen, analysts said on Tuesday.
The Indian rupee, after breaching the 74 per dollar mark to hit a 17-month low of 74.17 on Monday, closed on Tuesday at 20.14 against the dirham, but could extend the slump when the market opens after Tuesday's Holi festival holiday, analysts said.
The Pakistan rupee declined 0.7 per cent on Tuesday, extending a two-day decline to 2.1 per cent, the most in eight months as foreign investors withdraw $180 million from Pakistan's treasury bills in the first six days of March.
Dharmesh Krishnan, assistant general manager at Belhasa Global Exchange, said the Indian rupee is expected to trade weaker in the short term on account of the global meltdown over the past few days.
"The plunge in the crude prices also couldn't support the rupee. After today's holiday for Holi, the rupee is expected to trade between 73.65 and 74.77 against the greenback. If a widely anticipated intervention by the Reserve Bank of India is not there, pressure on the currency is expected to continue," said Krishnan.
Currencies across Asia have also been under severe pressure. Russia's central bank said on Tuesday it would sell foreign currency for the first time in five years after the rouble fell to a four-year low, while Kazakhstan sharply raised its key interest rate to stem a slide. The Saudi riyal recovered some of its losses against the U.S. dollar in the forwards market on Tuesday, after dropping to a more than two-year low on Monday following a plunge in oil prices.
The slump in the Indian rupee was on the back of a rout across global financial and oil markets on persistent concerns of severe impairment of the global economy due to the coronavirus outbreak. Further, free-fall in oil prices also weighed on the sentiments. Although, the rupee has significantly weakened in the past 10 days, over the past month, it has been depreciating and has weakened from around 71 per dollar to over 74.
Along with the global stock markets, the Indian equity market also witnessed a bloodbath, on Monday with the BSE Sensex registering its biggest single-day fall in its history as it closed 1,941 points lower. Investors lost around Rs7 trillion during the day due to the rout, analysts said.
The Sensex closed at 35,634.95, lower by 1,941.67 points or 5.17 per cent from the previous close of 37,576.62. The Nifty50 on the National Stock Exchange (NSE) closed at 10,451.45, lower by 538 points or 4.90 per cent from its previous close.
- issacjohn@khaleejtimes.com
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