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Where is USD INR headed at the time of Corona Virus? (Expert View)

Written by QuantArt Market

Forex Hedging | 10 min Read
Best Hedging Strategy For Importers, import port

USD INR can range between 72.00 to 76.00, depending on the severity of the Corona Virus impact.

Let’s understand this in more detail.

Globally, with major central bankers’ support to fight COVID induced paralyzed economies that have flushed the market with unprecedented liquidity, dollar strength has gone away. Currently, the dollar index is around 93. EURUSD is moving in a range of 1.1750 to 1.1950 and any day it may cross 1.20 level. and USDJPY is moving in a range of 105.50 to 106.50 range.

DOW moving around 28000 levels. All the risk assets are tremendously overvalued and climbing new heights on the back of liquidity. .

The virus is keeping its kingdom thriving. The total official infection count worldwide is 29 million +. No respite in case growth. The virus trends are intact. The US is clearly on a downward path, albeit slower than expected and the fatality count is slowly decreasing, towards 1000 a day. India remains critical, with 1150+ deaths per day. EU continues to show sharp increases in cases, but surprisingly the death count has not budged much, giving hope that the new wave is far less lethal.

The ICMR last week published the full results of the serosurvey conducted in May. According to the survey, 6.4 million adults were already affected by the virus by early May itself, and that the official infection data undercounted the actual by 80 to 120 times. Using the cumulative deaths at that time, one can estimate that the mortality rate of COVID is as low as 0.04% in India. Projecting the mortality rate to the current fatality count, one can estimate that the actual number of infections could be 190 million (19 crores) until now. Given that the death count is steady at 1200 a day, we can estimate that India could be adding 3 million new infections in a day. All now depends on the level of herd immunity required for the virus to die down. If the traditional estimate of 60% is to be reached, one needs another 8 months of spread. But, if we expect behavior similar to NY and London, one can expect to hit a herd immunity threshold of 25%-30% of the population by another 2 months. Going by the current trends in Delhi and Mumbai, the herd immunity threshold seems to be way higher than 25%. In all, we are in for another at least 5-6 months of pain.

 

Most importantly we have to keep reassessing

1. Exposures

2. Views

3. Hedge choices

4. Strategies on a continuous basis as new information flow in.

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