Dubai: The Indian rupee - and other Emerging Market currencies – have taken a hit after the Bank of England’s dire warnings about a looming recession. The rupee is currently at 20.89 to one dirham in the inter-bank market, slipping from yesterday’s 20.70 levels.
Those wanting to send remittances are getting exchange rates of 20.80 right now – “Markets are spooked by the Bank of the England’s recession statements coming just a day after the US Fed seemed to have soothed investor concerns,” said Antony Jos, Executive Director at Joyalukkas Exchange. “There was the US stock market’s steep 1,000 point plus drop and now, India’s Sensex and all other Asian markets are in the red.”
The Sensex too is down by more than 1,000 points, and what is happening with the Indian rupee mirrors those investor worries.
Currency houses in the UAE are reporting brisk remittance volumes since the start of business today (May 6), as the dollar’s strength against multiple currencies make it favourable to send remittances home. “Usually, by the fifth of each month, remittances following the salary crediting gets over,” said an official at a currency exchange. “This time, there were many NRIs who had held on thinking the second week of May will see the rupee decline to 20.85-20.90 range.
“They got a shock on Thursday when rupee actually gained after the RBI and US Fed rate hikes. Now, these expats will not be wasting any time to send the next remittance. I don’t think too many would be waiting to see what next week brings.”
"The BoE basically said there was going to be a recession next year, somewhat at odds with the Federal Reserve’s statements that a soft landing was possible in the US," said Jeffrey Halley, Senior Market Analyst, Asia-Pacific at Oanda. "Overnight BoE officials basically said they were going to concentrate on tackling inflation because there wasn’t much, they could do to offset a slowdown."