Policymakers hold back, rupee drops to record low

Both Prime Minister Modi and RBI Governor Das took cautious steps in their responses to the coronavirus outbreak this week, but left the door open for more aggressive measures. With domestic virus cases set to rise, the government could announce longer curfews. And with the growth outlook worsening, a significant policy rate cut is likely at the MPC meeting in April, if not before. Meanwhile, a crumb of comfort amid the market rout is that the drop in the rupee is unlikely to exacerbate strains in the banking sector.