Dubai: The Indian rupee has strengthened significantly in early trades on Friday, and dropping below 22 to the dirham for the first time since early October. Based on current trading levels, the AED-INR currency exchange would be at 21.90 plus levels.
For Indian expats in the UAE, the latest gains for the rupee might have come as a surprise, given that many had been expecting a dirham to be in the 22.50-22.80 range. It was in October that INR crossed 22 for the first time and then dropped to a new low of 22.66 on October 19.
At one point, the AED-INR exchange rate had been at 22.60, which for Indian expats in the UAE was the best ever. Today, the exchange rate has opened at 21.81 to the dirham. (It was in May that the rupee had crossed 21 for the first time.)
“The INR this morning is up by more than 1, starting the day at 80.71 to the dollar against the closing rate of 81.80 last evening,” said Neelesh Gopalan, senior Treasury Analyst at a Dubai-based fintech. “The INR strengthening has to do with the dollar’s weakness and the fact that India’s inflation has dropped to 6.4 per cent from 7 per cent plus.”
Not many market watchers – and Indian expats – were expecting the INR to fall below 81 (or 22 to the dirham). While the currency had seen some firming up and had dropped under 82, the sentiment was further declines to 81 was highly unlikely.
Given that much of the salary-linked remittances have already taken place first few days of this month, Indian expats would not feel the pinch immediately. But remittances by businesses here to India in the coming days would definitely feel the rupee resurgence.
Across all key Asian stock markets, the sentiment is being shared widely on Friday. At least for today, investors are thinking of the immediate rather than US Fed rate hikes or a looming global recession.
Much seems to have changed the past 48 hours. The US midterm elections threw up quite the surprise, with President Joe Biden’s Democrats putting up a showing that seemed beyond them. This was reflected in US stocks, which had their best day in two years on Thursday.
The Dollar Index – which tracks the US currency against major global currencies – is now at 108, well below the 114 plus levels of late September and the 112-113 seen through most of October. A higher score on the Dollar Index indicates the currency’s strength.