USD/INR flashes the record high as coronavirus triggers Indian stocks crash
- USD/INR tops the bulls’ radar amid the market’s rout due to the coronavirus carnage.
- India registers first death due to the pandemic, confirmed cases rally beyond 70.
- RBI showed readiness to act, announced liquidity infusion through swaps.
USD/INR refreshes the record top to 75.65, currently around 74.54, amid the initial Indian trading session on Friday. While broad risk aversion and flight to safety act as major catalysts, the first confirmed death due to the coronavirus (COVID-19) put the lid on fears at home.
In addition to the first death in Karnataka state, there are more than 70 positive cases in the Asian nation that cites the beginning of pandemic that has been threatening the global policymakers off-late.
On the broader front, traders seem to mark disappointment from the emergency fiscal and monetary packages that have been in the bundle during the week. Although there have been no major updates from India, the central bank, i.e. the Reserve Bank of India (RBI), said to "take all necessary measures to ensure that the effects of the COVID-19 pandemic on the Indian economy are mitigated, and financial markets and institutions in India continue to function normally."
Following that, the RBI also said to undertake 6-month US dollar sell/buy swaps to show its liquidity infusion tactics.
The global markets are witnessing the carnage as Wall Street marked the worst day since 1987 and the US equity futures are also in the sea of red by the press time. At home, India’s BSE SENSEX drops 9.43% whereas NIFTY50 slumps 10.74% at the time of writing.
Even if coronavirus headlines are likely to be the key, India’s fourth quarter (Q4) Current Account and Trade Deficit, as well as Bank Loan Growth for February 28, become important to watch.
Technical Analysis
Unless witnessing a daily closing below 73.20, bulls are less likely to relinquish their control. However, this doesn’t rule out intermediate pullbacks due to overbought RSI.