Indian rupee at new low of 80.28 to dollar after US rate hike - it is remittance time
Dollar's strength is placing all currencies under the hammer, INR seen at 80.20-80.40
Dubai: The Indian rupee has dropped to a new low against the dollar of 80.28 against dollar. On some currency tracking sites, the rupee to dollar was already show 80.25-80.35 ahead of the market opening, and well below the previous all-time low of 80.11 in August.
The INR is currently at 80.74, while in dirham terms it's crossed the 22 mark, as of 7.37pm UAE time.
“Indian rupee can go beyond 80.25 – the Dollar Index at 111.66 levels and we are seeing an impact on almost all the currencies,” said Krishnan Ramachandran, CEO of Sharjah based Barjeel Geojit Financial Services, earlier in the day.
The US Fed rates are expected to go up by another 125 basis points in the near future and this trend of a strong dollar is expected to continue near term.
"We can expect some heavy remittances that always accompany new lows," said a currency exchange house official.
"I think all spare funds are being remitted instantly, because the thinking among expats is to make use of the drop now rather than wait see what the trends will be up to Friday's close," said an official.
According to currency analysts, the key moment would be when the Indian central bank decides to intervene forcefully. The RBI has been doing it over recent weeks, to prevent the rupee from slipping up too far against the dollar. But that also means using up its dollar reserves, and according to recent reports that’s down to $550 billion or thereabouts. (The highest point for India's dollar reserves was the $642 billion in October 2021.)
The Dollar Index, which measures the US currency’s relative strength against major currencies, is well past the 111 mark, and portends further drops for those currencies. The euro, also in pre-market indications, is down to a new low, while the pound sterling is another to feel the pain.
The US dollar tested fresh two-decade highs versus major peers on Thursday morning trade, propelled by the Federal Reserve's hawkish outlook for interest rates.