Dollar makes sudden comeback, as rupee slips to 23.4 against dirham
Dubai: The Indian rupee is going through a sudden drop against the dirham, currently at 23.40 and a level that was last seen between June 21-23. As for Indian expats in the UAE and Gulf, this is the best break they have had after rupee-dirham levels stuck to 23.11-23.13 exchange levels when it came to sending money home.
The rupee had started the day at 23.24 levels to the dirham - but with the dollar starting to firm up through the late morning session, the rupee slid to 23.4.
"This is all about the dollar making a comeback after extended spell of weakness in the last 2 weeks," said an FX trader. "The next 24-48 hours will be crucial because you have the Trump tariff deadline of July 9 coming up.
"If new trade deals are cut, that's advantage plus for the dollar."
Looking at it another way, that will also mean weakness for major Asian currencies, including the INR.
Currency exchange houses are hoping the rupee's fall will prompt UAE Indian expats to hit the 'remit' button. This will compensate for a a marked drop in remittance volumes over the last weekend, when the AED-INR exchange rate was 23.13.
"Only those who had to send funds home ended up doing it," said a currency exchange official. "Many waited to see if something happens this week, and they have gotten lucky."
A check of the various remittance platforms - from banks to fintechs - show exchange rates between 23.22 to 23.31 available. Chances are that many Indian expats will wait to see what will transpire in the coming 24 hours - will the dollar weaken more?
The market is also seeing rising anticipation about a trade deal being struck between India and the US in the next two days or so. Signing up would mean India would get favourable tariffs on goods and services shipped to the US.
The main Indian stock exchange Sensex is trading flat at the moment.
"We are in a consolidating market - the US trade deal may be cited, but it is not inflicting any uncertainty on any particular sector at least as of now," said Milan Vaishnav, founder of ChartWizard.ae.
"The options data continue to show strong 'put' at levels slightly below today's. This can be interpreted as the market participants not expecting any major declines. The FMCG sector was the best performer followed by realty."
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