India’s economic slowdown to continue amid coronavirus crisis, USD/INR slides below 75.00

Reuters is out with its latest survey on coronavirus impact on the Indian economy and the Reserve Bank of India’s (RBI) next policy moves.

Key findings

“India's economy will expand just 4.0% annually on a year ago in the quarter that ends on March 31, the weakest since comparable records began in early 2012.

That is also slower than the 4.7% recorded in the last three months of 2019.

The economy was forecast to grow 2.0% next quarter and 3.3% in the July-September quarter.

Under a worst-case scenario, the economy was forecast to grow by a median 0.5% in April-June, with one economist predicting a 20% contraction. Still, only about one-quarter of those who answered this additional "worst-case" question said the economy would shrink.

Although a few economists said fiscal stimulus should be used to stoke a revival from this unprecedented hit to an already slowing economy, many in the poll said the Reserve Bank of India should deliver rate cuts of up to one percentage point.”

USD/INR offered ahead of RBI presser

The Indian rupee extends its two-day winning momentum into Friday, mainly driven by broad US dollar weakness and India’s fiscal stimulus. the Indian government announced a $22.6 billion economic stimulus package to fight the virus impact, as the nation remains in a state of emergency until April 15^th.

The USD/INR pair dropped to a fresh six-day low at 74.62 before recovering a few pips to now trade near 74.71, still down 0.23% on the day. The focus now remains on the press conference held by the RBI Governor Shaktikanta Das, with traders expecting liquidity-enhancing measures to be unveiled later today.