Rupee Gapped Lower At The Open

The rupee weakened at the open on the back of cautious sentiment following reports of a lockdown in Mumbai. India reported 103,558 new infections in the past 24 hours, a record increase. Because of this Maharashtra, which contains Mumbai, will impose restrictions from 2000IST on Monday. All non-essential services will be halted while private offices have been asked to work from home. USD/INR has since regained some ground, rate last at 73.3313 vs opening levels of 73.3625 and the previous close on Wednesday March 31 of 73.1125

• Elsewhere, Markit India March PMI Manufacturing fell to 55.4 from 57.5 previously, this denotes the lowest reading in seven months. Commenting on the latest survey results, Pollyanna De Lima, Economics Associate Director at IHS Markit, said: "After starting 2021 on a stronger footing than it ended 2020, the manufacturing sector lost further growth momentum in March. Production, new orders and input buying expanded at softer rates. However, in all three cases, the increases were sharp and outpaced their respective long-run averages. "Survey participants indicated that demand growth was constrained by the escalation of the COVID-19 pandemic, while the rise in input buying was curtailed by an intensification of cost pressures. "While predictions that the vaccination programme will curb the disease and underpin output growth in the year ahead meant that business confidence remained positive, growing uncertainty over the near-term outlook due to a rise in COVID-19 cases dragged sentiment to a seven-month low. "With COVID-19 restrictions expanded and lockdown measures re-introduced in many states, Indian manufacturers look set to experience a challenging month in April."
• Markets look ahead to the RBI rate announcement on April 7.
• Fig1: India Manufacturing PMI Output Index & Manufacturing Production Y/Y