India and Pakistan Currencies Exposed to dive further

The currencies of India and Pakistan will continue to witness increased volatility in the coming days as global economic concerns and the possibilities of a further plunge in financial and oil markets deepen, analysts said on Tuesday.

The Indian rupee, after breaching the 74 per dollar mark to hit a 17-month low of 74.17 on Monday, closed on Tuesday at 20.14 against the dirham, but could extend the slump when the market opens after Tuesday's Holi festival holiday, analysts said.

The Pakistan rupee declined 0.7 per cent on Tuesday, extending a two-day decline to 2.1 per cent, the most in eight months as foreign investors withdraw $180 million from Pakistan's treasury bills in the first six days of March.

Dharmesh Krishnan, assistant general manager at Belhasa Global Exchange, said the Indian rupee is expected to trade weaker in the short term on account of the global meltdown over the past few days.

"The plunge in the crude prices also couldn't support the rupee. After today's holiday for Holi, the rupee is expected to trade between 73.65 and 74.77 against the greenback. If a widely anticipated intervention by the Reserve Bank of India is not there, pressure on the currency is expected to continue," said Krishnan.

The slump in the Indian rupee was on the back of a rout 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 10 days, over the past month, it has been depreciating and has weakened from around 71 per dollar to over 74.