Indian rupee slips to 85 against dollar for first time in big boost for NRIs
Dollar surge leaves rupee at best remittance level ever for Indian expats
Dubai: The Indian rupee has come under more intense pressure after the dollar’s sharp rise yesterday, treading at 23.12/23.13 levels to the dirham early today.
In dollar terms, the current levels are 85.06, and the first time it's happening to the rupee.
Thus, the rupee has dropped to a fresh low much quicker than many analysts had been expecting. What it means is that Indian expats in the UAE and Gulf find themselves at quite an advantage when it comes to remittances.
“The 23.1 plus levels were expected only at some point in Q1-2025 – that it happened even before end of 2024 is a surprise,” said Neelesh Gopalan, senior FX analyst with a Dubai-based fintech.
"The RBI (Reserve Bank of India) could intervene at any time given the levels rupee is at, because further delays could compound it."
This is what UAE and Gulf based Indian expats need to keep a close eye on. Even if the RBI were to try and stabilise the rupee (by buying up dollars), it could be that the INR will still be at 23 to the dirham levels.
How the India rupee opened on first trading day of January 2023 and January 2024:
- January 2023: 82.77 to $ (22.53 to AED)
- January 2024: 83.23 to $ (22.65 to AED)
The RBI (Reserve Bank of India) could intervene at any time given the levels rupee is at, because further delays could compound it.
INR still 'resilient'
According to Foram Chheda, Technical Research Analyst and founder of ChartAnalytics, "While RBI is likely to intervene to cushion the fall, the rupee remains among the more resilient Asian currencies this year. And continues to relatively outperform many of its regional peers despite this setback.
"In the medium term, the rupee is expected to find strong support and unlikely to weaken beyond the 85.30 to the dollar."
Which means Indian expats in the UAE and Gulf have a certain window of opportunity to make maximum use of the all-time low rates. Already, ahead of the usual New Year remittance spike, several remittance platforms have been promoting the 'zero fees' offers.
While RBI is likely to intervene to cushion the fall, the rupee remains among the more resilient Asian currencies this year.
Markets throw a fit over US Fed action
After the US Fed said there won't be too many rate cuts in 2025, the global stock markets gave the decision a definite thumbs down. Asian markets are all in the red, with the Sensex lower by 926 points at 11:30 India time. Indian stocks have not been having too good a week, as it is.
"The key Indian indices have opened a percentage point lower in line with the overnight global market trades," said Milan Vaishnav, Technical Analyst at ChartWizard.ae. "It's important to note that the Indian markets are technically weak after the recent technical rebound failed to cross the 100-DMA (Daily Moving Average). The reason the US Fed gave to go slow on 2025 rate cuts just aggravated the overall weakness in the Indian markets."
It's important to note that the Indian markets are technically weak after the recent technical rebound failed to cross the 100-DMA (Daily Moving Average)...
'Violent reaction'
Some analysts say the reaction by investors was extreme. "It was a little perplexing to see such a violent market reaction to (US Fed Chairman Jerome) Powell’s remarks, particularly considering how ‘every man and his dog’ had been expecting this sort of a pivot in the run up to the meeting," said Michael Brown, Senior Research Strategist at Pepperstone.
The Fed may have spoiled this year’s Santa rally, as its hawkish shift could trigger a deeper correction across US equity markets—which have enjoyed two stellar years largely thanks to Big Tech