Home Forex News Indian Rupee Under Pressure Against Dollar After Rate Cut

Indian Rupee Under Pressure Against Dollar After Rate Cut


Indian Rupee has lost some ground against the dollar on the country’s central bank cutting interest rate in response to the coronavirus pandemic. The Reserve Bank of India has swung into action with a 75 basis point rate cut as part of its latest policy measure.

Interest Rate Cut

The repurchase rate has since dropped to 4.40% from 5.15%. Similarly, the RBI has cut the cash reserve ratio by 100 basis points to 3% as part of a stimulus package targeting banks and other lending institutions in the country.

India joins a number of countries around the world that have cut interest rates in a bid to lower lending rates in the wake of the coronavirus pandemic that has taken a toll on the economy. The epidemic has taken a toll on businesses with things expected to get even worse on the government instituting total lockdown.

With the economy under immense pressure, the RBI is also considering other easing measures. Part of the measures, which the RBI is exploring include conducting auctions for long term repo operations for up to 1 trillion rupees.

Struggling Economy

India’s economy is under immense pressure as the COVID-19 pandemic continues to take a toll on various sectors in the country. Things could get worse especially on the Central Bank Governor, Shaktikanta Das warning that it is highly unlikely the economy will grow at the projected 5% as macroeconomic risks continue to spiral out of hand.

Amidst the economic slowdown, the Indian Rupee has lost substantial ground against the dollar with downward pressure in full swing. The currency has dropped to 2018 highs against the dollar to the 74.48 level.


Amidst the ongoing sell-off, the Rupee could drop to the 72 levels the next substantial support level. To avert a further slide, the Rupee would have to rise and find support at the 75.41 handle, which is the immediate resistance level.

A government lockdown, which means over 1.3 billion people cannot step outside their house is the latest tailwind that should continue to weigh in on the Rupee strength against the dollar.


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