We can only pray that the virus doesn't infect the rupee.

"New Delhi: Finance Minister (FM) Nirmala Sitharaman on Thursday announced Rs 1.7 lakh crore (Rs 1.7 trillion), named Prime Minister Garib Kalyan Scheme, aimed at taking care of the poor, urban and rural workers, and those in need of immediate attention." "Under Pradhan Mantri Garib Kalyan Ann Yojana, FM announced 5 kg of rice or 5 kg of wheat for the next three months. This is in addition to 5 kg of rice or 5 kg of wheat, the government is giving at present. In addition, FM announced 1 kg of pulse for the next three months via public distribution system." In tandem, "Mumbai:The Reserve Bank of India (RBI) on Friday cut interest rate by 75 basis points (bps) -- the sharpest in over a decade." This was done to decrease the borrowing cost of the government. The RBI borrows money for the government by selling bonds and, "The 10 year benchmark bond yield dipped 22 basis points to as low as 5.98% before paring some of its gains." Question is whether there will be demand for bonds at these lower rates because on 24 March, "For half an hour after trading started, nobody bought or sold a bond on the Reserve Bank of India's platform." Also, "RBI slashed the cash reserve rate (CRR) by 100 basis points to 3% of bank deposits straight away unleashing Rs 1.37 lakh crore into the banking system for the next one year." CRR is the proportion of deposits that banks have to hold in cash so as to be able to meet sudden withdrawal demand. Boosting liquidity in banks was necessitated by the withdrawal of Rs 530 billion by depositors from banks in the fortnight ending March 13. The rupee has been falling against the dollar because foreign funds have been selling Indian equities, at one point falling below 76 to the dollar. The fall in interest rate should be a disincentive to carry trade, because, although the Federal Reserve slashed interest rate in the US to 0-0.25%, investors have to factor in any future fall in the value of the rupee. Strangely, the rupee has hardened to 74.876 to the dollar. This maybe a reaction to the news of an enormous rise in the number of coronavirus patients in the US to over 100,000 and investors fear a recession in that country. Foreign exchange reserves have dropped by $11.98 billion in the last week maybe because of repatriation of dollars by foreign investors and sale of dollars by the RBI in an effort to support the rupee. Selling dollars reduces the amount of rupees in banks so the RBI cut CRR to increase money supply. The RBI paid Rs 1.76 trillion to the government from its reserves last August. The rupee is the key. It plunged from 53.67 against the dollar in May 2013 to 69.13 in August, just on talk of tapering quantitative easing in the US. On the one hand, sale of dollars and bonds reduces liquidity, while reduction in CRR increases it. What this does to the rupee the future will show. We can only pray that the virus will go away.