The dollar started to rise as Asian currencies also started to fall against the dollar. Though the the lockdowns were not as severe as in March-May it was estimated that it would slow the growth and the earnings of companies. Various States started announcing lockdowns which also took the market by surprise and estimates for GDP by various rating agencies began to be revised again as the lockdown would surely affect the growth of the economy. Meanwhile, corona cases in the country started rising alarmingly and reached nearly a lakh cases daily in April. It was again proved that the RBI, backed by its immense foreign exchange resources, could ensure that it will always control the direction of the movement of rupee though it always says it controls the volatility. However, the RBI proved everybody wrong and USD-INR closed the year near 73.10 after touching an intra-day high of 73.59. RBI’s movesĪs March 2021 approached, it was expected that the RBI would take the USD-INR higher (for paying higher dividend to the Central government), but till the expiry on March 26, 2021, the dollar was near to its low point and later on since the month, quarter and year were ending it was expected that selling would continue and keep the pair at its lowest. Exporters rarely got a chance to sell at good levels as most of the time the inflows kept the rupee on an appreciated level. The inflows continued and allowed the dollar to touch a level of 72.25 thrice. The earnings growth was above the estimates, but the PE rose to 38 against an average PE of 18-20. The Sensex and Nifty started consolidating at these levels but individual stocks performed well especially in the chemical, IT and pharma industries as earnings growth was expected to be higher by about 15 per cent. The RBI bought nearly $121 billion from the market in a span of one year taking its forex reserves to a new high of $590 billion. The rupee also rose based on the flows, but here the RBI was standing like a wall as it prevented any appreciation of the rupee beyond 72.25. The dollar was getting sold everywhere as Asian currencies rose with the CNY rising to 6.40 levels from seven against the dollar. The stock market levels nearly doubled in about nine months from the fall and Sensex crossed 50,000 and the Nifty, 15,000. The stock market started to rise as inflows from FPIs, FDI, corporate borrowing (due to low interest rates in the western economy), inflows from a string of IPOs and NRIs started to increase. The growth estimates for the next FY began to be revised and it was expected that in the first quarter of 2021-22 the economy is likely to grow at 24 per cent considering the base effect and an overall growth of 12 per cent in the financial year 2021-22. Once the unlock phase started and the number of corona cases in the country started to fall, the economy returned to its growth phase in the third quarter of the financial year. Operation unlockĪfter a phased lockdown from March 18 to May 30, 2020, operation unlock was started in which the economy was opened in phases. At this juncture, Reliance started to sell stakes of Reliance Jio and Reliance Retail thus bringing in about $25 billion of FDI into the country. Meanwhile, the BSE Sensex had fallen to 25,000 levels and the NSE to 7,500 levels as the market gave a thought to the after-effects of the pandemic to the economy. The rupee fell to a new all-time low of 76.91 on Apbefore the RBI supported it and started selling dollars to stabilise it. Last year before the pandemic, it was consolidating between 69 and 71 broadly and as the pandemic broke out the pair also broke out and closed the financial year 2019-20 at 75.80.Īs the pandemic cases rose the consequences of the pandemic also rose with the GDP in the first quarter of 2020-21 plummeting by 24 per cent. The dollar-rupee rate has shown a tendency to consolidate in a range for 6-12 months and then give a break out.

Current dollar to rupee exchange rates