Rupee sinks below 74/USD level in early trade amid mounting fears of coronavirus-led slowdown

The Indian rupee plunged 82 paise to 74.50 against US dollar in opening trade on Thursday after the World Health Organization declared the new coronavirus (COVID-19) a pandemic.

Forex traders said market participants turned jittery amid mounting fears of a coronavirus-led economic slowdown.

Weak opening in domestic equities and foreign fund outflows too dragged the local unit, they added.

The rupee opened at 74.25 at the interbank forex market and then fell further to 74.50, down 82 paise over its last close.

The local unit had settled at 73.68 against the US dollar on Wednesday.

Though weakening of the American currency in the overseas market and easing crude oil prices supported the rupee, traders believe there are mounting fears of recession in major economies due to the coronavirus outbreak. This could weigh on the local unit, they said.

World Health Organization (WHO), late Wednesday night, termed the the new coronavirus outbreak as a pandemic, and expressed deep concern over the "alarming levels of inaction".

Following the announcement, US President Donald Trump suspended all travel from Europe, excluding the UK, to the US for the next 30 days to stop the spread of the virus.

Brent crude futures, the global oil benchmark, fell 5.53 per cent to USD 33.81 per barrel.

Foreign institutional investors (FIIs) remained net sellers in the capital markets, as they sold shares worth Rs 3,515.38 crore on Wednesday, as per provisional data.

Domestic bourses opened on a negative note with benchmark index Sensex trading 1,672.61 points down at 34,009.81 and the broader Nifty plunging 469.50 points to 9,988.90.

The dollar index, which gauges the greenback's strength against a basket of six currencies, fell by 0.27 per cent to 96.24.

The 10-year government bond yield was at 6.19 per cent in morning trade.

COVID-19, that first originated in the Chinese city of Wuhan in December last year, has claimed over 4,200 lives and infected more than 117,330 people across 107 countries and territories.