Indian rupee slips to 23.49 as US deadline for trade deal comes closer
Dubai: Pressure is back on the Indian rupee, trading at 23.49 to the dirham – and pushing it closer to the ‘sweet spot’ of 23.5/23.6 for Indian expats in the UAE when it comes to their fund transfers. The previous big drop for the rupee came on June 23, when it was at 23.62, but that was there for just 24 hours or so.
The current official exchange rate is 23.36-23.44 for one dirham, and NRIs are hoping there will be a further slippage before August.
The next 10 days are seen as critical for India and the rupee, with all eyes on any announcement of a trade deal with the US by August 1. Off and on in the last 2-3 weeks, there would emerge reports about an ‘imminent’ deal being struck – but so far, there’s nothing. Which is adding to the downward pull on the Indian rupee.
There’s nothing better that UAE’s Indian expats with upcoming remittances would like than to see the rupee come back to 23.5/23.6.
“The rupee’s been stuck at 23.2-23.4 through most of the last 20-30 days – but that’s likely to change,” said Neelesh Gopalan, Treasury Manager at a Dubai-based payments platform. “The dollar’s strong and steady now and towards the end of each month, there is the added pressure of Indian corporate houses needing more dollars to square their export bills.
“Our forecasts are for the rupee to slip to 23.5-23.6 in the short-term.”
The Dollar Index – which benchmarks the US currency against its major peers – is stable at 98 plus levels, a major improvement on the 96 levels it had been for the better part of recent weeks. Which also explains why the rupee was holding firm 23.2-23.3 during this period.
Now, the situation seems ripe for a change.
“The dollar remains relatively strong due to steady US interest rates, which keeps global investors attracted – and placing continued downward pressure on the INR,” said Foram Chheda, founder of ChartAnalytics.
“Given the latest lower inflation data in India, expectations suggest the Reserve Bank of India (RBI) may cut rates further to support domestic growth.
“Lower Indian rates make the rupee less appealing to foreign investors. The ongoing uncertainty around US tariff policies continues to influence this pair as well.
“The INR’s move against the AED will range between 23.27 to 23.65 in the immediate short term.”
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