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USD/INR: Mildly bid above 75.00 amid risk aversion in Asia

  • USD/INR extends Friday’s recovery gains.
  • Asian stocks remain on the back foot amid fears of coronavirus extension.
  • Measures from the RBI, Indian government fail to please investors during the 21-day lockdown.

With the coronavirus (COVID-19) fears weighing on the Asian markets, USD/INR remains on the front foot around 75.45 while heading into the European session on Monday. In doing so, the pair buyers pay a little heed to the latest efforts by Indian policymakers to combat the pandemic.

The Reserve Bank of India’s (RBI) surprise rate cut and the government measures seemed to be have been ignored by the Indian traders as macro sentiment remains bearish. Also spreading pessimism is the loosely followed 21-day lockdown that raises fears of further fatalities.

That said, there are a total of 31 deaths and more than 1,100 infections as per the latest statistics from the Asian nation. On a broader scale, the risk-tone remains heavy after the US President Donald Trump signaled that the virus cases could rise in the next two weeks while extending the lockdown in major states till April 30.

In addition to fighting against the pandemic, the Indian government got another burden amid a mass exodus of migrant workers nearby the state capital to elsewhere.

According to the domestic rating agency, Indian Credit Rating Agency (ICRA), Indian GDP could contract by 4.5% in the April-June 2020 quarter.

While portraying the risk-off, the US 10-year treasury yields remain heavy below 0.70% whereas India’s equity benchmarks, namely the BSE SENSEX and the NIFTY 50, mark losses more than 1.0% by the press time.

Amid a lack of major data/events on the economic calendar for today, investors will continue following coronavirus headlines for fresh impulse. However, the risk-off and the US dollar pullback could keep the pair positive.

Technical analysis

A daily closing below mid-month top surrounding 74.60 could offer intermediate selling until then odds of witnessing upside towards 80.00 round-figure can’t be ruled out.

 

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