India’s rupee on Friday was sticking to firmer ground - but can it remain so with the Omicron threat in play? Image Credit: Gulf News Archive

Dubai: The Indian rupee is firming up - and Indian expats who were hoping for a favourable exchange rate on their next remittance will have reason to be disappointed.

On Friday morning, the rupee is at the Rs20.34 for one dirham, much improved from the 20.60-20.70 levels of last week. At one point, it was down to 20.24 - and the strongest point so far this month. 

“The sentiment last week was that the rupee will exhibit continued weakness heading into the New Year, at 20.60 levels,” said Antony Jos, Managing Director at Joy Alukkas Exchange, which hd seen its rupee remittances touch Rs200 million a day in the first 10 days of the month. “There was enough happening last week to suggest a dip to a new all-time low of 21 to the dirham was imminent.

“The relative strengthening of the last two-three days has thus come as a relative surprise.”

This month, the rupee-dirham exchange had dropped to a lowest point of 20.78 while the highest was at 20.35. So, Indian expats if they can help it should watch out for currency market trends of the next few days before deciding when to send in their January remittances.

The lowest point the rupee has reached so far is the 20.88 to the dirham on April 20, 2020. During 2021, the rupee dropped 4 per cent and making it the worst performing emerging market currency in Asia.

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Will Omicron unsettle rupee?

For currency watchers, the detail to watch out for is how deep any Omicron-related outbreak will impinge on the India economy, which according to earlier forecasts was set to put in another bumper round of GDP growth.

On Friday, India’s stock markets opened a bit shaky as more cases were reported in the country, and the government started on taking counter measures to curb any spread possibilities. Which is why the rupee’s relative strength on Friday might have come as a surprise.

Then again, it is about context. “Until last month, Indian expats were comfortable with 20.20 levels to the dirham for their remittance triggers,” said a currency exchange official. “It’s only the December weakness that the rupee showed that had them resetting it to 20.60 levels. Plus, the hope it would further to 21, a new low.”