Dubai: The Indian rupee gained more strength on Tuesday, trading at 21.52 to the dirham and up from the 21.68 range on Monday, helped by dollar erasing some of its recent strength.
“A better picture of rupee’s direction will be there later today, after the European markets open and offers trends on where’s euro and pound sterling are headed,” said a senior treasury analyst. “The market will need more time to decide whether rupee’s strength of these two days will continue.” Since the start of the week, the euro and pound have regained some of their luster and reversed dollar's march.
According to other sources, the next level to look out for by Indian remitters is whether the rupee firms up to 79 to the dollar. Today, it’s at 79.07 level, having strengthened from 79.50. “It’s unlikely that the rupee will breach 79 to 78.80/78.90 levels,” said the analyst. “Because in less than 10 days, there will be a US rate hike and that’s always a boost for the dollar.”
The highest point for the rupee this year was on January 12 when it was at 73.81 to the dollar (or 20.10/Dh).
On Tuesday, the Sensex is up over 468 points by 11 UAE time, even though there are concerns about retail inflation and whether this will mean another round of forceful rate hike intervention by the country’s central bank. But the talk is about India’s GDP continuing to put in fairly sizeable growth patterns.
Another plus was India assuring continued oil supplies from Russia at lower import prices.
“Buying oil from Russia has a simple business logic - at least 30-40 per cent discount as compared to prevailing market rate,” said Amit Jain, Co-founder, Ashika Global Family Office Services. “Currently, India imports only 19 per cent of its overall oil import from Russia.
“However, oil hovering around $90-$100 can impact India’s fiscal deficit badly. You will find Indian government has projected oil prices to be hovering around $70 to $80 during their financial year 2022-23. In my personal view, the government should look at importing 40 per cent of its oil from Russia at least in the short term, until prices settle down to its long-term average of $70 per barrel.”