Rupee already above 74/USD, likely to see further volatility

On Monday, the rupee touched a 17-month low of 74.17 a dollar.

The slump in rupee was on the back of the carnage across global financial and oil markets on persistent concerns of severe impairment of the global economy due to the coronavirus outbreak. Further, free fall in oil prices also weighed on the sentiments.

Although, the rupee has significantly weakened in the past ten days, over the past one month, it has been depreciating and has weakened from around 71 per dollar to over 74.

Slump in oil prices played a major role in the currency market. Energy markets went into a free fall on Monday with oil prices across variants plunging around 30 per cent, the biggest fall since the 1991 Gulf War.

The slide comes after Saudi Arabia shocked the market by launching a price war after no consensus was arrived between OPEC and Russia to cut crude oil production as part of market stabilisation exercise.

Late last week, talks between oil cartel Organisation of Petroleum Exporting Countries (OPEC) and Russia collapsed as the two sides failed to agree on an output cut deal. This pushed Saudi Arabia, the world's largest oil producer, to cut its crude prices and announce increase production leading to a mayhem in an already over supplied oil market.

Brent crude prices fell to $31 per barrel on Monday. Currently, Brent crude futures have somewhat recovered and are currently around $36.81 per barrel. The West Texas Intermediate (WTI) crude is around 33.47 per barrel.

Along with the global stock markets, the Indian equity market also witnessed a bloodbath on Monday with the BSE ensex registering its biggest single day fall in its history as it closed 1,941 points lower.

Investors lost around Rs 7 lakh crore during the day due to the rout, analysts said

The Sensex closed at 35,634.95, lower by 1,941.67 points or 5.17 per cent from the previous close of 37,576.62.

The Nifty50 on the National Stock Exchange (NSE) closed at 10,451.45, lower by 538 points or 4.90 per cent from its previous close.