Here are 10 things to know about the wild movement in currency markets today:
The rupee started the session at 74.39, and soon plunged to as low as 74.50 - a lifetime low, as a continuing selloff in domestic markets amid the coronavirus scare triggered the lower circuit for the benchmark equity indices at 10 per cent.
Crude oil prices rose more than 3 per cent, but were still set for their biggest weekly fall since the 2008 financial crisis, as investors fretted over evaporating demand from the coronavirus pandemic and a production ramp-up by top producers. Brent crude - the global benchmark for crude oil - was last seen trading lower by $1.12 at $34.33 a barrel, after falling more than 7 per cent the previous day. For the week, it is set to fall around 24 per cent.
On Thursday, the RBI announced liquidity measures such as six-month, buy-sell swaps worth $2 billion to boost liquidity citing the need of dollars in the market, and ease pressure on the rupee.
The central bank acknowledged the selling pressure across global markets due to the spread of coronavirus (COVID-19) infections "compounded by the slump in international crude prices and a decline in bond yields in advanced economies".
The RBI also pledged to use the record forex reserves of $487.24 billion (as of March 6) to support the financial markets and institutions. The forex reserves remain "comfortable to meet any exigency", it said as it sought to allay concerns about the financial markets. It also said it is "closely and continuously monitoring the rapidly evolving global situation" and "stands ready" to mitigate the impact of the COVID-19 pandemic on economy.
"The panic in equities has not snowballed into currencies to the same extent. The central bank has done a good job of containing volatility so far," said Abhishek Goenka, founder and CEO of forex advisory firm IFA Global. "After making a lifetime high, the USD-INR pair retraced back to 74.00 mark on visible regulatory interventions."
Some analysts however cautioned against the recovery saying the forex market is likely to remain under pressure in the near term.
"Levels are of no significance as when panic grips the markets, the moves are one-sided. Markets will wait to see how aggressive is the intervention from RBI and to what extent it can curb further losses in the pair," said Amit Pabari, managing director at another forex advisory firm CR Forex Advisors.
Financial markets around the world have entered a bear phase - 20 per cent off recent highs - as the fast-spreading coronavirus outbreak is looming over the world economy.
"A weekly close on either side of the range 73.75-74.50 will guide further direction," added Mr Goenka of IFA Global.