Rupee skids past 20 vs UAE dirham

dubai — The Indian rupee continued its fall on Wednesday to hit a 16-month low to slip past ₹20 versus the UAE dirham or 73.56 against the US dollar before regaining and closing at ₹19.95 (73.28) on the back of escalating panic over the spread of coronavirus.

Against the UAE currency, the rupee was trading at 20.01 at 8:00pm UAE time, the first time it breached the mark since October 2018 when it slid to 20.25 against the dirham and 74.4 against the greenback, according to the data compiled by

Currency market analysts predict the rupee weakening to even 75 against the dollar in the short-term as the impact of Covid-19 on economic growth seemed to be more serious than what has been thought so far.

They said the weakness in equities is spilling over into the currency market. Foreign investor selloff also has been behind the sharp fall of the rupee, they said. Given these fears, the exchange rate could depreciate further to around 74.23. Should the rupee fall that far, it would come within striking distance of the all-time low of 74.45 against the dollar, analysts said.

On Wednesday, after opening weak, the rupee recovered by 24 paise to 72.95 against the greenback in early trade following the Reserve Bank of India’s assurance that it would take appropriate actions to preserve financial stability in the financial market amid growing coronavirus fears.

On Tuesday, the Indian currency had fallen by 43 paise to close at a 16-month low of 73.19 against the dollar amid concerns over the impact of coronavirus.

Foreigners have turned net sellers of Indian debt and equities, leading to pressure on the Indian currency. Foreign portfolio investors have sold ₹80.42 billion in equities and bonds in the first three days of this month alone, shows data from the National Securities Depository.

Analysts expect the Indian rupee to remain weak. The ‘black swan’ nature of the coronavirus threat means the currency will continue to react to news flow.

Indian equity indices fell on Wednesday, with the BSE Sensex falling 214 points, or 0.55 per cent, to 38,409.48. The Nifty slipped 49 points, or 0.43 per cent, to end at 11,254.