Dubai: UAE based Indians planning to remit money home could get better exchange rate for their dirham in the week ahead as the rupee is likely to weaken against the dollar.
Any weakening of the Indian currency against the dollar will be reflected in its exchange rate against the UAE dirham because of its peg to the dollar.
The rupee closed at Rs74.41 per dollar and 20.27 against the dirham on Friday.
The outlook for rupee in the week ahead appears subdued because of potential outflow of dollar following a few recent initial public offerings (IPO) that offered foreign venture capitalists and early stage investors opportunity to exit and repatriate their investments.
Significant large IPO outflows along with high commodity prices and the strengthening of dollar is expected to exert pressure on the rupee.
"Expect rupee to depreciate in the coming week due to Zomato outflows and other IPO money going back," Sajal Gupta, Head, Forex and Rates at Edelweiss Securities was quoted by IANS.
The greenback on Friday booked a second week of gains after a volatile few days as risk appetite waxed and waned.
The dollar index, which measures the greenback against a basket of six major currencies, was slightly higher on the day at 92.894. That was off a 3-1/2-month high of 93.194 hit on Wednesday.
For the week, it was up 0.1 per cent, after rising 0.6 per cent previously. The yield on 10-year Treasury notes hovered around 1.3 per cent, or almost 17 basis points higher than a five-month low set on Tuesday, but was still at the low end of a recent range.
Despite the Opec+ agreement to raise the output, the crude oil prices are on the rise after a temporary blip earlier last week. On Friday, Benchmark US crude oil for September delivery rose 16 cents to $72.07 a barrel Friday. Brent crude oil for September delivery rose 31 cents to $74.10 a barrel.
OPEC+, agreed last week on a deal to boost oil supply by 400,000 barrels per day from August to December to cool prices and meet growing demand. But as demand was still set to outstrip supply in the second half of the year, Morgan Stanley forecast that global benchmark Brent will trade in the mid to high-$70s per barrel for the remainder of 2021.With the possibility of Brent trading above $75, forex traders expect further pressure on the rupee.
All eyes on the Fed
Analysts see the prospect to the Fed hinting at an early tapering of its $120 billion per week asset purchase programme in its policy meeting later this week. Any indication of an early tapering could mean the dollar gaining against most emerging market currencies including the Indian rupee. Any hawkish move by the Fed could mean the rupee depreciating to more than 75 a dollar.