Indian rupee
Most Asian currencies weakened against the dollar, which gained on account of nervousness that surging energy prices could spur inflation and interest rate hikes. Image Credit: Bloomberg

Dubai: The Indian rupee is expected to weaken further against the UAE dirham due to the strengthening of the US dollar and rising crude oil prices.

The greenback’s gains against the rupee is automatically reflected in the rupee – dirham exchange rate as the UAE currency is pegged to the dollar.

The Indian rupee dropped to its lowest level since April. Indian currency ended at 74.9750/9850 per dollar, after touching 74.9875 — its lowest since April 23. It had closed at 74.4450 on Tuesday.

The UAE dirham is fetching more than Rs 20.40 in the interbank foreign exchnge market. The rupee also fell for a third straight session, shedding 0.7 per cent, its biggest single-day loss since June 17.

In the context of the rising crude prices, analysts expect India’s trade balance to widen and dollar outflows to pick up pace in the coming weeks. Brent crude futures, the global oil benchmark, advanced 0.54 per cent to $81.70 per barrel late Tuesday.

Factors such as the rising dollar, crude prices and strong dollar demand from importers are likely to weigh on rupee in in the near term.