India rupee falls - here's why UAE NRIs should not delay sending money

Dubai: With the rupee slipping to 23.55/23.56 to the dirham, Indian expats in the UAE are looking at the best rates so far this month when sending remittances.

The trend in the coming days points to continued weakness for the Indian rupee, with the dollar/dirham inching higher. And that’s just ideal for those Indian expats in UAE awaiting their next paychecks.

But FX sources say that the current rupee softening need not last long, with lots depending on whether India manages to do a trade deal with US before August 1.

“Already, UAE remittance platforms are offering dirham-rupee exchange rates of 23.55-23.56,” said Neelesh Gopalan, Treasury Manager at a fintech. “The previous lowest was the 23.6 on June 23, but that lasted only for a brief while before going back to 23.2.”

For most of July, the Indian currency had been in the 23.2-23.3 range and it’s only this week that there has been the drop back to 23.4 levels against the dirham. Now, the latest drop takes it down 23.56.

By now, a US-India trade deal does look imminent – but until there’s an official announcement, the pressure on the rupee will continue to build, says FX trackers. The deadline for a deal with the US is August 1, and so far the likes of Japan and the Philippines have done so.  

“The rupee has remained on the weaker side mainly due to the uncertainty over the US tariff and trade agreement,” said Subramanian Sharma of Mumbai-based Greenback Advisory Services.

According to him, the rupee could have dropped further if not for the new free trade deal signed by India with the UK.

“If a deal with the US also happens, rupee can see a good pull back and could revisit Rs23.2-23.3 levels.

“The moment the uncertainty over a trade agreement with US is over, the rupee could see a good correction with a positive bias. However, if no deal happens, rupee could remain in the range of 23.52 to 23.63 against the dirham.”