The rupee fell sharply against the US dollar today to register a new low as the greenback continued its rally against other global currencies. The rupee fell to 75.31 against the dollar at day's low, compared to its previous close of 74.24. The dollar today also surged against other Asian currencies as investors sold currencies, bonds and stocks in Asia to pile into the world’s reserve currency. The US dollar index, which measures greenback against a basket of six currencies, rose 0.24% to a record high of 101.40.

So far during the day, the rupee traded in the range of 74.77 to 75.31 against the US dollar, after opening at 74.96. The rupee settled at 74.99 against the US dollar.

Besides the broad dollar strength, the rupee has been weighed down by selling of Indian stocks and bonds by overseas investors. Indian bond yields have been rising as foreign investors dump rupee-debt and after the Reserve Bank of India disappointed markets by refraining from announcing interest-rate cuts this year.

Foreigners have pulled a combined $10 billion from Indian shares and debt so far this month - the biggest withdrawal since the U.S. taper tantrum of 2013.

The RBI's next decision is due April 3, but rules allow Governor Shaktikanta Das to call an unscheduled meeting of the monetary policy committee.

Global oil prices rebounded today after a big selloff over the past three sessions which took rates to 18-year low of about $27 a barrel. Though the drop in crude price is seen positive for Indian economy and the rupee but "in past instances when we have seen extreme risk aversion, we have had phases in which crude tumbles and rupee too depreciates," said Abhishek Goenka, Founder & CEO, IFA Global.

Overnight, on Wall Street, the S&P 500 fell 5%, extending its losses to about 30% over a month. And futures indicate another deep cut today. The selloff in equity markets come despite emergency interest rate cuts around the globe, enormous fiscal support packages. But so far none of it has been able to put a floor under dire sentiment, and some $15 trillion in shareholder value has been wiped out in little more than a month of heavy selling.

The Sensex today fell nearly 600 points.

"Indian rupee remains under tremendous pressure given the fallout of coronavirus pandemic. Similarly, various emerging market currencies are bearing the brunt of foreign capital outflows from equity and debt markets. Meanwhile, US dollar continues to power higher against the basket of currencies as global financial markets remain very unsettled. Markets are now dealing with a situation which is not easy to quantify or discount. The easiest choice is to ride out the storm by seeking out safe havens, although in such times we are also seeing safe haven currencies like Japanese yen going through immense volatility," said Hitesh Jain, lead analyst at Yes Securities.

"On rupee outlook, we sense that volatility will persist unless the adverse impact of the pandemic on the global financial markets abates. Though falling current account deficit (thanks to low oil prices) and stronger balance of payment is a positive for INR, markets are clearly positioned for a risk-off trade. We see rupee in the rage of 74-76 for next 1-2 months," he added.

The ECB on Wednesday pledged to buy 750 billion euro ($820 billion) in bonds through 2020, with Greek debt and non-financial commercial paper eligible under the programme for the first time.

And the coronavirus outbreak has worsened though China reported zero local cases. Italy on Wednesday reported the largest single-day death toll increase from coronavirus since the outbreak began in China in late 2019. The national death toll in the European country surged by 475 over the past 24 hours, the largest increase in numerical terms since the outbreak first came to light on February 21. Globally, coronavirus has has killed more than 8,700 people globally, infected more than 212,000 and prompted emergency lockdowns on a scale not seen in recent memory. (With Agency Inputs)

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