ISLAMABAD – The currencies of India and Pakistan will continue to witnessincreased volatility in the coming days as global economic concerns and thepossibilities 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-monthlow of 74.17 on Monday, closed on Tuesday at 20.14 against the dirham, butcould extend the slump when the market opens after Tuesday’s Holi festivalholiday, analysts said.
The Pakistan rupee declined 0.7 per cent on Tuesday, extending a two-daydecline to 2.1 per cent, the most in eight months as foreign investorswithdraw $180 million from Pakistan’s treasury bills in the first six daysof March.
Dharmesh Krishnan, assistant general manager at Belhasa Global Exchange,said the Indian rupee is expected to trade weaker in the short term onaccount of the global meltdown over the past few days.
“The plunge in the crude prices also couldn’t support the rupee. Aftertoday’s holiday for Holi, the rupee is expected to trade between 73.65 and74.77 against the greenback. If a widely anticipated intervention by theReserve Bank of India is not there, pressure on the currency is expected tocontinue,” said Krishnan.
Currencies across Asia have also been under severe pressure. Russia’scentral bank said on Tuesday it would sell foreign currency for the firsttime in five years after the rouble fell to a four-year low, whileKazakhstan sharply raised its key interest rate to stem a slide. The Saudiriyal recovered some of its losses against the U.S. dollar in the forwardsmarket on Tuesday, after dropping to a more than two-year low on Mondayfollowing a plunge in oil prices.
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The slump in the Indian rupee was on the back of a rout across globalfinancial and oil markets on persistent concerns of severe impairment ofthe global economy due to the coronavirus outbreak. Further, free-fall inoil prices also weighed on the sentiments. Although, the rupee hassignificantly weakened in the past 10 days, over the past month, it hasbeen depreciating and has weakened from around 71 per dollar to over 74.
Along with the global stock markets, the Indian equity market alsowitnessed a bloodbath, on Monday with the BSE Sensex registering itsbiggest 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, analystssaid.
The Sensex closed at 35,634.95, lower by 1,941.67 points or 5.17 per centfrom the previous close of 37,576.62. The Nifty50 on the National StockExchange (NSE) closed at 10,451.45, lower by 538 points or 4.90 per centfrom its previous close.
– issacjohn@khaleejtimes.com
