Dubai: The Indian rupee has slipped further to 21.38/21.39 levels to the dirham, thus setting up opportunity gains for UAE’s Indian expats awaiting their monthly salary crediting. The overnight currency exchange rate was at 21.21/21.22, but that will change early today as the rupee sees more pressure build up.
If the same trends persist, the rupee could be looking at 21.42/21.43 over the next two days.
According to FX sources, the rupee is not alone in this relative drop, with the euro and the pound too retreating against the dollar. And there are many who now see the rupee hitting 22 to the dirham within weeks rather than in a more gradual manner. It was on May 9 that the rupee slipped past the 21 level.
“The pressure is not going away as long as worries remain about inflation and what this could do to India’s growth chances,” said an analyst. “The stress on the rupee would have been even higher if not for the discounted oil imports India is getting from Russia.”
According to local exchange houses, the remittance volumes for the rupee has been steady through the month, with Indian expats reckoning that 21+ to a dirham will continue and that they will not rush to remit for marginal dips. “The next round of excitement will only happen when the rupee comes to 21.50/Dh,” said a treasury analyst. “That would represent a major barometer.”
Sensex weakens
In initial trading on Tuesday (June 28), the Sensex slipped more than 200 points, clipping the 400 plus point gain from Monday. “With Q1-FY23 nearing its conclusion, investors are prepping for corporate earnings results for the quarter,” said Mitul Shah, Head of Research at Reliance Securities, in a note. “Interest rate hikes, growing concerns about corporate profits and economic growth continue to throttle investor sentiments amid global issues of Russia-Ukraine war.
“FIIs (foreign institutional investors) have sold more than $39 billion over the past 9 months, making it the largest and longest sell-offs, even worse than the global financial crisis of 2008.”
The rupee’s continued weakness is thus part of this narrative - will the slide to 21.50 come in a rush?
