Rupee sees worst fall in 20 months

MUMBAI: The rupee nosedived 113 paise to 74.56 against the US dollar on Wednesday — its worst single-day rout in 20 months — as concerns mounted over the surging Covid cases in the country.
On Monday and Tuesday, India had reported more than 1 lakh daily new infections. To contain the virus spread, local authorities in several parts of the country have imposed lockdown restrictions that limit economic activities.
The domestic currency opened at 73.52 against the greenback.It finally settled at 74.56 to the dollar, its lowest closing level since November last year. The rupee also logged its worst single-day fall since August 5, 2019.
“The rupee depreciated amid concern over rising Covid cases in India and lockdown restriction in some states. Furthermore, the RBI kept its repo rate unchanged for the fifth consecutive policy meeting and maintained an accommodative stance,” said Saif Mukadam, research analyst at brokerage firm Sharekhan.
The central bank kept its key policy repo rate unchanged at 4% but warned that the recent surge in Covid infections has created uncertainty over economic growth recovery.
The central bank’s accommodative policy stance also led to a rally in the bond market with the yield on the benchmark 10-year gilts closing at 4 basis points (100bps = 1 percentage point) lower at 6.08%. The 30-year G-sec yield also softened by 4bps to 6.74%, while yield on 10-year state loans and AAA-rated corporate bonds softened by 7bps to 6.73%.