Fed cut rates by another 50 bps on Sunday (in an unscheduled meeting) to near Zero. In addition, Fed announced massive bond purchase of USD 700 bn. Fed also cut bank reserve requirements to zero and lowered discount window rates (bank short term borrowing cost from Fed) by 150 bps. Fed also announced easy swap lines in conjunction with other 5 major central banks to ease USD liquidity. Fed Chairman vowed to maintain rates low till the negative economic impact wanes. Rate cut and timing is reminiscent of 2009 emergency action. This time, the fight is against an unknown epidemic threatening lives and systems. Fed Chairman said that all economic projections are off the table now and the situation is evolving on a daily basis. With major central banks having done their part, it is for the Governments to come out with fiscal measures. G-7 Finance ministers are having a meeting via video conferencing and are likely to discuss progress in vaccine development, remedies and fiscal actions.
USD is now gaining strength on safe haven status. Gold, which was considered as safe haven is on decline now. Global Equity markets have ignored Fed actions and is focused on fast spreading Corona virus havoc. Italy alone has reported 368 deaths in a single day.
USDINR is now at 74.15. It opened at 74.07.