Mumbai, April 16 (IANS) The Indian currency has been volatile against the US dollar off late and on Thursday, it closed at an all time low of 76.86 per dollar.
According to analysts, the weakness has been largely due to bleak outlook for the Indian economy amid the coronavirus crisis and the subdued trade on the stock markets.
“This is due to the lower India growth forecast and also the lower interest rate in India. FII outflow was around $4.9 bilion of Indian shares so far in March and this is surpass the 2008 figures,” Anuj Gupta, DVP Commodities and Currencies Research, Angel Broking, said.
“Upcoming GDP and IIP data may be lower in India due to the lower industrial activity and lockdown in India may reduces spendings. Lower demand may also be the reason of the big dent on the Indian economy.”
Gupta, however said that lower crude prices and good monsoon expectation may support the Indian economy further.
Interestingly, this volatility continues despite the reduction of trading hours in the forex market. On Thursday, the Reserve Bank of India (RBI) on Thursday said the new market timings for the government bond and forex markets will be maintained till April 30.
Earlier, the RBI notified that market activities including the sales and purchase of G-secs will commence by 10 a.m. and end at 2 p.m. from April 7 to April 17 in a bid to curb volatility.
“In view of the Government of India’s order that the lockdown will continue till May 3, it has been decided that the amended trading hours for various RBI regulated markets will continue to be effective till the close of business on Thursday April 30,” the RBI said in a statement.