The rupee on Friday depreciated by 40 paise to settle at 76.46 against the US dollar due to fears of capital outflows after Franklin Templeton Mutual Fund suddenly closed its six debt fund schemes.
Weak domestic equities and a strengthening greenback overseas also weighed on the local currency.
Forex traders said market sentiment weakened after a potential antiviral drug for coronavirus reportedly failed its first trial.
The rupee opened lower at 76.30 at the interbank forex market and then fell further to 76.47 before closing at 76.46, down 40 paise over its last close. The rupee had settled at 76.06 against the US dollar on Thursday.
The rupee witnessed strong fallout again due to likely overseas outflows from local stocks amid some uncertainty after Franklin Templeton Fund closed six schemes, Jateen Trivedi, Senior Research Analyst (Commodity & Currency) at LKP Securities said.
Franklin Templeton Mutual Fund voluntarily decided to wind up its six debt schemes citing redemption pressure and lack of liquidity in bond markets due to coronavirus pandemic. This is the first instance when a fund house is shutting its schemes because of coronavirus-related situation.
Market participants are also concerned that a sharp rise in coronavirus cases could weigh on the global as well as the domestic economy.
The number of coronavirus cases around the world has crossed 27 lakh. In India, over 23,000 cases have been reported so far.”Any piece of bad news regarding coronavirus, rattles the risky assets including rupee and we see it breaching fresh record lows,” Emkay Global Financial Services Head of Research – Currency Rahul Gupta said.
Gupta further noted that “all this while, investors were hoping on flattening coronavirus cases and progress of a vaccine, but now there are doubts in the development of drugs. This uncertainty will continue to fickle the forex market”.
In USD/INR spot 75.70-75.75 has been acting as crucial support, and will remain the same, going ahead we may see prices breach 77-77.15 level, he further noted
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