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In the view of analysts at Australia and New Zealand (ANZ) banking group (ANZ), the Indian rupee remains exposed to further downside risks in the near-term amid persisting coronavirus crisis.

Key quotes

“Expect RBI to keep intervening in order to maintain rupee competitiveness vis-à-vis Chinese yuan.

Fed’s emergency 50 bps cut may stem decline in rupee in near-term but if contagion spreads, INR may fall more.

Believe risk to further near-term rupee weakness high, especially given seasonal weakness in Apr-Jun.

INR’s relative resilience has given way due to heightened global market volatility, more virus cases in India.”

USD/INR drops to test 73.00

The rupee bulls were rescued by the emergency Fed rate cut overnight that sent the US dollar broadly lower to a new-month low of 97.00. The collapse in the US Treasury yields as investors ran for cover in the US bonds knocked-off the greenback.

In response to the Fed surprise move, the USD/INR opened Wednesday’s trading with a bearish gap of about 23-pips to test the 73.00 support area.

At the press time, the spot trades flat, printing daily lows at 73.03.