Dubai: The Indian rupee could come under renewed pressure today (December 16), with one dirham at Rs20.75 and slipping from the Rs20.40-Rs20.50 range of recent days. Trends in the currency as well as Indian stock markets over the next few hours should set the tone for the rupee in the coming days.
There could be some heavy remittance volumes over the next 48 hours, according to multiple sources in the currency markets. “Remittance numbers have been higher since the start of the month – but there were still many who had held back thinking the rupee could fall further,” said one.
So far, the Reserve Bank of India has not intervened to bolster the rupee (by buying up dollars). The lowest point ever for the rupee against the dirham has been the 20.88 it touched on April 20, 2021. For one, the country’s exports are benefitting from the weaker rupee. The other factor weighing on the currency is the steady increase in oil prices.
In the year-to-date, there have been three occasions when the rupee slipped past the 20.50 mark against the dirham for an extended period before picking up some strength.
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It follows a pattern of steady remittance increases to India since the start of October. According to Antony Jos, Managing Director at Joyalukkas Exchange, “Rupee has trended weaker for the better part of the last few weeks – that coupled with renewed optimism about the UAE economy has been driving higher remittances since October.
“But there are certain patterns emerging. High networth Indian expats seem to be retaining their funds here than was the case before, with a lot of their savings/investments going into buying a home in Dubai or other emirates. This has been noticeable for most of this year, and more so now.
“The current remittance spike is thus led by low-to-mid-income expats as well as the blue-collar workforce sending money back to India to their dependants.”