USD/INR, Indian rupee traded flat today amid reopening of shops and businesses in some states. IMF announced that it expects India’s GDP growth at 1.9% for this fiscal year. To boost the Asian market, China cut-off lending rates ahead of poor GDP data and to help in procuring materials at cheaper cost.
Major Oil Trader Bankrupt
Due to low oil imports globally, high cost and low demand led to a major oil trader suffering a USD 800 million loss. Hin Leong Trading PTE Ltd, a Singapore based trading company filed for bankruptcy.
This vital sector has taken a big hit due to the Coronavirus pandemic spread. The demand globally declined to a new low against low prices of oil supply. It’s the first time after 2001, the prices have collapsed this low and productions cuts have also not contributed enough for reviving the sector. USD/INR to further be volatile as crude oil prices continue to fall.
Gold
Since Coronavirus lockdown in India, Gold remains a safe haven for investors. However, Gold prices fell today due to decline in global rates. Due to firm US dollar, gold prices remained under pressure today. For investors hoping to see downfall for investing can wait a little more as experts suggest Gold prices to slash further. The drop level broke March’s expectation of continuing high thereby impacting USD/INR.
Inflation
Shaktikanta Das while announcing relief package confirmed inflation rate falling below 4% in India. Early signs of retail inflation falling below 4%. Consumer Price Index expected at long term and mid-term target of 4% with 2% bias on either side. Inflation was at the highest in January 2020 but since lockdown it’s declining. INR expected to be strong if inflation continues to decline.
RBI Buys Government Bonds
Reserve bank of India bough government bonds for the first time in 2020 from a secondary market. Tackling economic loss due to lockdown remains a worry for the Central Bank therefore buying bonds may lead to short term liquidity. This may further help INR against USD in long term as government continues to fix fiscal deficit.