Remit or hold? Indian, Pakistani rupee to be volatile this week ahead of US rate hike
Against UAE dirham, Indian rupee at 21.69, Pakistani rupee at 64.50 on Tuesday
Dubai: As market investors assess how aggressive a stance the US central bank would take on near-term monetary policy, remitters would have to wait and watch this week for beneficial forex rates before sending money back home, especially to India and Pakistan.
The Indian rupee firmed on Tuesday as the US dollar retreated on improving risk sentiment. The partially convertible rupee rose 0.2 per cent to 79.61 per dollar on Tuesday, but it has weakened 0.8 per cent in the past four sessions from a high of almost 79.10.
Against the UAE dirham, the value of the Indian rupee was at 21.69 on Tuesday. Check the latest forex rates here. Weakness in the Indian currency's value against the US dollar will be automatically reflected in its exchange rate with the UAE dirham as the UAE currency is pegged to the dollar.
"There will be some breather for the rupee. It may trade around 79.45-79.80 before the Fed event as we'll see more of a consolidation phase," said Kunal Sodhani, vice president at global trading centre, South Korea-based Shinhan Bank, told Reuters.
Pakistan rupee seen dropping against the UAE dirham
Pakistan's currency is on the cusp of a record low. The rupee is about 0.4 per cent away from 240.375 per dollar, the all-time low it reached earlier this year. The currency has fallen more than 8 per cent in September.
Against the UAE dirham, Pakistani rupee was at 64.50, and forex analysts see it getting weaker in the coming days as inflation surged to the highest in almost five decades, while also grappling with the aftermath of a series of deadly floods.
"The IMF loan was more to do with sentiment and was expected to be followed by inflows from other friendly countries," said Sana Tawfik, economist at Arif Habib Ltd. in Karachi, told Bloomberg. "These things were to materialise, but we don't see any inflows yet."
Apart from overseas funding to boost reserves, Pakistan has also sought to clamp down on currency speculation. It is investigating eight banks for foreign-exchange speculation and selling dollars about 5%-10% higher than the market rate, according to finance minister Miftah Ismail.