RBI Will Infuse Rs 1 Lakh Crore To Fight Coronavirus; US Stock Markets Witness Worst Day In 30 Years
The Covid-19 pandemic has not only affected the tech sector, which we have been fervently covering since the past few months but also has shown massive blow to not just the Indian economy but also the world economy.
Wall Street stocks recorded their worst day since 1987 on Monday. Not just that, there have been everyday reports of the BSE indexes fluctuating heavily since the past 3 weeks. Indian economy is affecting too.
Federal Reserve Lowers Interest Rates to 0-0.25%
Wall Street stocks had their worst day since 1987 on Monday, joining the global market carnage as the coronavirus outbreak shut down a widening part of the US and global economy.
- The Dow Jones Industrial Average plunged 12.9%, i.e., nearly 3000 points at 20,188.52.
- The broad-based S&P 500 dove 12.0% to 2,386.13.
- The tech rich Nasdaq Composite Index shed 12.3%, falling to 6,904.59.
The losses were the most substantial since worries over a coronavirus-induced recession became the market’s preoccupation over the last three weeks or so.
Monday’s dreary session came after the Federal Reserve announced a series of emergency measures Sunday night, including lowering interest rates to a range of 0-0.25%. The shocking revelation here is the fact that these low interest rates were seen during the 2008 global financial crisis.
The Federal Reserve is also removing reserve requirements to allow banks to use cash backstops to meet unexpected funding needs.
RBI Announces Rs 1 lakh crore liquidity Infusion for Banks
The RBI Governor, Shaktikanta Das announced Rs 1 lakh crore liquidity infusion for banks through a long-term repo operation (LTRO) at its policy rate of 5.15%. It has also announced a second six-month dollar-swap facility, according to which it has made $2 billion available to the forex markets for six months.
The industry associations were disappointed that the RBI did not announce a mid-term revision in policy rates. However, RBI’s step to ensure additional liquidity through LTRO and swap transactions will ensure two objectives of further compression in term structure of interest rates and ensuring dollar liquidity.
Apart from this, Das also asked the public to shift to digital channels and electronic services like mobile banking, internet banking and cards to limit social contact and visits to bank branches.
According to Das, the tentative estimates of consequent loss of global growth are currently placed in the range of 0.4% to 1.5%. He said that since India isn’t immune to this pandemic, the fears could impact economic activity in India directly through trade channels.
The second round of effects of the pandemic could bring a slowdown in the domestic economic growth.
The governor said that the central bank would provide an
assessment of the economic impact of Covid-19 in India in its monetary policy