The Reserve Bank of India (RBI), in a unprecedented move, cut market trading hours for both bonds and foreign exchange to four hours, citing possible operational and logistical risks arising from the nationwide lockdown due to the COVID-19 outbreak.
The country went into a 21-day lockdown starting March 25 amid rising cases of infections in the country. So far India has seen more than 2,300 cases of COVID-19, the respiratory disease caused by the new coronavirus, and 56 deaths.
The situation created by the COVID-19 outbreak has necessitated lockdowns, social distancing and restrictions on movement of people across the country, with most offices having made arrangements to work from home, RBI said.
“The resultant dislocations have adversely impacted the functioning of financial markets. Staff and IT resources have been severely affected, posing operational and logistic risks,” the RBI said in the release.
“The thinning out of activity is impacting market liquidity and increasing volatility of financial prices.”
Bond market volumes have been around a 10th of the usual levels, while the rupee has hit multiple record lows over the last couple of weeks.
“Should compliment RBI for taking this step, as some activities require people to come to the office,” said A. Prasanna, an economist with ICICI Securities Primary Dealership. “Volumes are already down and should not get affected more.”
The RBI has reduced trading hours to 10 a.m. to 2 p.m. (0430-0830 GMT) for all markets, including bonds, forex, various repos as also money markets and derivatives.
The shortened trading hours will be effective from April 7 to April 17, the RBI said.