The USD/INR rose as a spike in coronavirus cases across the world

Abhishek Goenka IFA Global

The USDINR pair made a gap-up opening at 74.58 levels and traded in the range of 74.58-74.92 with an upside bias. The pair finally closed at 74.87 levels. The RBI set the reference rate at 74.7148 levels. The USDINR rose as a spike in coronavirus cases across the world as well as concerns about a new strain of the virus in South Africa dampened investor sentiment for riskier assets.

Investors became concerned that a surge in COVID cases globally could prompt authorities to impose lockdowns to limit the spread of the virus, which could derail the nascent economic recovery. Moreover, a slump in domestic equity indices further added fuel to upmove in the pair. Market participants said that importers also stepped in to buy dollars today to cover their existing bets as financial markets in the US were closed on Thursday on account of Thanksgiving. This further weighed on the local unit. On an annualized basis, the premium on the one-year, exact-period dollar/rupee contract was at 4.71% compared with 4.83% at the close on Thursday.

The resurgence of COVID-19 cases in Europe and subsequent lockdowns in some regions had also impacted market sentiment. Core consumer prices in Tokyo rose at the fastest pace in over a year in November, data showed, as electricity and fuel costs surged due to higher global energy prices. Oil prices recorded their steepest daily fall since July as a new COVID-19 variant spooked investors and added to concerns that a supply surplus could swell in the first quarter.

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Author

Abhishek Goenka

IFA Global

Mr. Abhishek Goenka is the Founder and CEO of IFA Global. He pilots the IFA Global strategic direction with a focus on relentlessly improving the existing offerings while constantly searching for the next generation of business excellence.

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