Rupee Overview

The Rupee opened weaker at 75.7500 as concern over the staggering rise in cases of coronavirus in the US dampened global risk appetite. The US recorded the second-largest daily rise in COVID-19 cases, with states such as Florida, California and Texas reporting a record surge in infections. New cases of coronavirus have reportedly risen 25% on week in the US.Investors were concerned that the resurgence in new cases could prompt governments to slow the pace or reverse the easing of containment curbs and hamper the re-opening of business activity. This may cast a shadow over hope of rapid recovery in the economy. The International Monetary Fund said that the global economy is seen shrinking 4.9% in 2020. In April, the fund had projected a contraction of 3.0%. In the June update to its World Economic Outlook report, the IMF also revised global growth outlook for 2020 to 5.4% from 5.8%. The IMF sees the Indian economy shrinking 4.5% in 2020-21 (Apr-Mar), as against its earlier forecast of 1.9% growth. In 2021-22, the IMF sees India's GDP growth rising to 6.0%. The Fund said its revised forecasts implied a total loss of over $12 trln for the global economy in 2020 and 2021, with per capita income likely to reduce in 2020 for over 95% of countries.In India, hope of foreign fund inflows may support the rupee, as some dollar inflows for overseas investments into Jio Platforms are speculated to still be in the pipeline. But market players fear that any significant dollar sale would be absorbed by the Reserve Bank of India's dollar-buying intervention in the spot market.The escalating tensions at the border will also keep the rupee under pressure and any military confrontation at this juncture will surely damage the already fractured economy but will hold its pride.