The pandemic crisis has worsened over the last two weeks. In addition, market pressure has been pushed also by the rush to hedge USD positions. In the midst of Coronavirus taking over the world recently, the Reserve bank of India has taken an essential step to combat the coronavirus induced market turmoil by opening the US Dollar-Indian Rupee Exchange window of 2 billion USD, but kept options available to offer as much as the market requires with its full suitcases. The Indian rupee has fallen 5percent this year as foreign investors sell domestic securities aggregating more than Rs.22crores.

It has aggravated in the past two weeks as the pandemic panic spread. Furthermore, the rush to hedge open USD positions has also been pressuring the market.

The central bank is able to negotiate with the currency from the position of strength rather than the current fires of crisis with record-high reserves of foreign currencies and lowest current-account deficits in live memory. Due to the decline in crude oil prices which is a significant contributor to this deficit, the current account is anticipated to surplus expected at the end of March. While the RBI Monetary Policy Committee is expected to lower interest rates, its foundations remain in the danger of inflation.

Worldwide, emerging markets are crashing as investors dump assets in their safety ride. The demand for the US dollar has risen around the world, leading to a shortage of USD. On Monday, the Central Bank will auction 2 billion USD to enable banks to deposit Indian rupees to receive US dollars at a discount. Six months of these funds will be available with India's reserves recorded at 490 billion USD in foreign currency reserves.

While there is an assumption that the interest rate might be reduced, the RBI Monetary Policy Committee has stood its ground and inflation still remains a threat.