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RUPEE IN FREE FALL ON COVID-19 FEARS; RBI SOOTHES MARKET

Focus: GS-III Indian Economy

Why in news?

  • The rupee fell for the third consecutive session on 3rd March 2020 on concerns over the deadly COVID-19 spreading in India amid the central bank stepping in to calm investor sentiment.
  • The rupee dropped below the 73-a-dollar level even as the equity markets bounced back, snapping a seven-day losing streak.

Details

  • The Reserve Bank of India (RBI) stepped in to issue a statement saying the central bank was closely monitoring the situation and stood ready to take appropriate action.
  • The central bank acknowledged that the spill-over of the global financial market turmoil in India had been largely contained as there were hopes of coordinated policy action.
  • Globally, financial markets have been experiencing considerable volatility, with the spread of the coronavirus triggering risk-off sentiments and flights to safe haven.
  • Spill-overs to financial markets in India have largely been contained.
  • Growing hopes of coordinated policy action to mitigate a broader fallout to economic activity have boosted market sentiment.
  • The Reserve Bank of India is monitoring global and domestic developments closely and continuously and stands ready to take appropriate actions to ensure orderly functioning of financial markets, maintain market confidence and preserve financial stability.
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June 2022
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