Stock - India Economy - Rupee
UAE exchange houses were recording average daily rupee remittances of Rs200 million earlier this month, when the currency had come under intense pressure. Image Credit: Bloomberg

Dubai: The Indian rupee looks all set to close the month - and the year – on firmer footing, with the exchange rate at Rs20.19 for a dirham and the lowest it has been this month. This represents a complete turnaround from the situation just a fortnight ago, when the talk was that the rupee could drop past a new low of 21 to the dirham.

The Rs20.19 that the rupee is seeing early on Thursday is the strongest it has been this month – a period when it had even gone down do to Rs20.78 to the dirham.

“The rupee’s new-found strength is because of the dollar’s weakness, and that’s directly caused by the increased number of Omicron cases in the US,” said Antony Jos, Managing Director at Joyalukkas Exchange. (The dollar index has slipped to 95.90 from 96.70 levels.)

India too is dealing with more cases of Omicron infections being reported, but so far this is not reflected in pressure falling on the rupee. Heading into the New Year, the rupee will still not have it easy – another wave impacting on economic growth could trip up the rupee to lower levels.

According to Jos, however, “The rupee will continue its stable run in the next few months and then drop to around Rs77 to the dollar by September next. We expect it to be more than 4 per cent weaker than the current level.”

Remittance run

Even with the recent firming up, December has proved a good month for rupee remittances from the UAE. In the first 10 days of the month, average volumes a day at leading exchange houses were at Rs200 million plus, and since last week, when the rupee started regaining, it dropped to below Rs100 million or thereabouts, sources say.

“The higher December remittances also had to do with end-of-year visits to India by NRIs here,” said Jos. “It will be January before we get any indication of whether the rupee strength is impacting into the sending volumes.”