The Indian rupee (INR) today slid to near a record low against the US dollar in the backdrop of a global risk-off sentiment amid continued worries over the economic impact from the coronavirus virus. The rupee today fell to as much as 74.34 per dollar to near its record low of 74.48, a level hit in October 2018. Opening at 74.28 per dollar, the rupee has traded in the range of 74.08 to 74.34 so far during the day. In comparison, the rupee had closed at 73.64 against the USD in the previous session.

Here are five things to know about INR-USD trade today:

Domestic equity markets witnessed a bloodbath today with Sensex falling as much as 2,700 points, crashing into a bear territory after coronavirus outbreak was termed a pandemic and the US suspended travel from Europe. The Indian government has also suspended most visas in a bid to contain the epidemic as the confirmed cases in the country rose over 70.

Weighing on the rupee is the risk-off sentiment across the globe which has seen foreigners pulling out over $2 billion from Indian stocks this month, the most since August.

Some analysts say that the rupee could test all-time lows if risk-off sentiment exacerbates further. "There is extreme panic and risk aversion at this point in global markets. If coronavirus-induced disruptions exacerbate, we may see a follow-up move in USD-INR to new all-time highs," says Abhishek Goenka. founder and CEO of IFA Global.

On the other hand, the plunge in the global crude oil price, say analysts, remains a bright spot for India. Since crude has fallen by $20 per barrel, it would ease headline inflation in India. "This would give the RBI leeway to cut rates by at least another 50 bps. We expect the inflation to revert to 3.5-4% levels with a good rabi harvest and lower crude prices," Mr Goenka added.

Analysts will also watch the reaction of Reserve Bank of India, which is sitting on record forex reserves of $482 billion, thanks to its continued purchases in the currency markets over the past few years. (With Agency Inputs)

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