Rupee falls by 23 paise to 4-week low on fresh COVID-19 scare

The rupee depreciated by 23 paise to settle at around four-week low of 73.84 against the US dollar on Monday as muted domestic equities and strong American currency weighed on investor sentiment.The local unit opened at 73.77 at the interbank forex market and lost lost further ground to hit a low of 73.88 in the day trade.

The currency finally settled at 73.84 against the greenback, registering a decline of 23 paise -- its worst single-day decline in the past one month and the lowest closing level since September 29.The rupee had closed at 73.61 on Friday.

"The Indian Rupee depreciated against the dollar and posted its worst day decline in one month as risk appetite waned in the region due to surging coronavirus cases in Europe and the US which pushed investors towards the safe-haven dollar," Sriram Iyer, Senior Research Analyst at Reliance Securities, stated.

The US Dollar took support from rumours that France, Spain and Italy could impose complete lockdown to curb the spread of the coronavirus, Iyer said.The dollar index, which gauges the greenback's strength against a basket of six currencies, rose 0.25 per cent to 93.00.

Rupee ends down on Monday tracking strong dollar and selloff in local stocks as European nations return to full lockdown as cases of the virus surged. Lockdown in Europe is driving investors into safety of dollar. FIIs too are pulling out of local stocks, Jateen Trivedi, Senior Research Analyst (Commodity & Currency) at LKP Securities, said.

The USD-INR has resistance near 74.45 odd zones and supports near 73.75-73.60, he added.On the domestic equity market front, the 30-share BSE benchmark Sensex closed down by 540 points or 1.33 per cent at 40,145.50. The broader NSE Nifty tumbled 162.60 points or 1.36 per cent to 11,767.75.

Foreign institutional investors were net buyers in the capital market as they purchased shares worth Rs 906.93 crore on a net basis on Friday, according to provisional exchange data.Brent crude futures, the global oil benchmark, fell 3.14 per cent to USD 40.46 per barrel.

An impasse over a much-needed stimulus package in the US supported the safe-haven greenback in Asian trade. A subdued trade in Asian equity markets is likely to keep Indian equities muted for a considerable time, Alankit Ltd Managing Director Ankit Agarwal said.

Agarwal further said for the past two consecutive days, the US reported record high number of COVID cases. As Germany, France, and Italy also saw a surge in new cases of COVID-19, investors fretted about potential restrictions to prevent further spread of the infectious disease. 

(IMAGE CREDITS:PTI)