From being a better performing currency in the previous quarter to turning into a weak one, has made Indian rupee turned into the worst-performing currency among its peers in Asia. In the early trade, the rupee fell by 17 paise to 75.22 against US dollar and this depreciation is expected for some time.
The fall of rupee is expected to continue as COVID-19 cases rise in India. The number of new COVID-19 cases in India hit a record high with over 2 lakh infections being reported in a day, while the active cases surpassed the 14-lakh mark, according to the Union Health Ministry data updated on Thursday. With the new cases, the total tally of COVID-19 cases in the country rose to 1,40,74,564.
At the interbank foreign exchange, the domestic unit opened sharply lower at 75.19 against the dollar, and lost further ground to quote at 75.22, a fall of 17 paise over its previous close. In early deals, it touched a low of 75.23.
According to Bloomberg, the rupee weakened past 75 per dollar for the first time in eight months this week. The currency depreciated by around 4 per cent over the last three weeks.
The rising COVID-19 cases revived the fear of lockdown which left the Indian economy to contract to a record low in 2020. According to the Reserve Bank of India’s last bi-monetary policy in April, the real GDP growth for 2021-2022 is retained at 10.5 per cent. However, the present scenario is expected to impact the economy.
The rupee depreciated by 2.6 per cent against the dollar so far in April. Meanwhile, it saw a decline of 0.1 per cent in the quarter ended March. It fared better than other Asian currencies in withstanding rising US yields in the last three months thanks to a rare current account surplus, economic recovery and heavy foreign inflows.