Indian rupee
It was supposed to be a smooth ride for the Indian rupee until the February 1 central budget announcement. But it may not be so. Image Credit: Gulf News Archive

Dubai: The Indian rupee could be in for some early volatility today (January 14), reversing the recent gains that it had been making. After dropping below Rs20 to one dirham, the rupee is now at Rs20.14, opening up possibilities for Indian expats in the UAE thinking of remittances.

Overnight, currency exchange houses had pegged the rupee at Rs19.98 to the dirham. (For comparison’s sake, the highest point for the rupee in 2021 was 19.70 (in March last) and the lowest point was 20.78 which it dropped to in December.)

"Today's trend suggests the rupee could go from 19.90 to 20.20 and even further to 20.50," said Antony Jos, Managing Director at Joy Alukkas Exchange. "This seems what the near future has in store for the rupee."

The sudden change in the rupee’s upward march has to do with events in the US, with the Federal Reserve giving more signals about its “aggressive” rate hike plans. What that usually means is that global investors will pull out funds from emerging markets such as India and go after dollar-backed assets. It inevitably leads to pressure on emerging market currencies.

“Rupee dropping against the dirham/dollar today could be a momentary reaction after the latest US Fed announcements,” said a senior official at a local currency exchange house. “The next big change for the rupee was likely to happen around the February 1 Indian federal budget.

“There could be opportunities for expats in the UAE to make the best of any renewed volatility in the rupee.”

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Wait until Monday?

It could be that the full indicators of what is in store for the rupee in the short-term will be clear only from Monday onwards. Right now, the rupee-dirham is in the 20.3-20.15 levels. If it slips to 20.20 and more, that should be the time for expats Indians to make full use of their dirham remittances.