Indian rupee still low after rate cut: Send now or wait for more drop?

Dubai: The Indian rupee remains at extremely favorable remittance levels to the dirham (and dollar) – and with a strong possibility of a further drop to 24 against Dh1 for the first time.

It was on November 29 that the rupee slipped below 23 for the first time and currently trades at 23.8. “If a dirham fetches anything over 23 rupees, these are extremely favourable remittance terms for the expat Indian in the UAE,” said an official with a currency exchange house in Dubai.

“It took more than 2 years for the INR to move from 22 to 23, but in the space of just over 2 months, the INR is staring at hitting 24.”

There are signs of the dollar being up for some more firming up next week, as markets weigh up the various issues related to US tariffs, global economic growth, etc. If that happens, then the rupee is in for further softening in the dollar/dirham exchange rates.

Today (February 7), the Reserve Bank of India dropped interest rates by 0.25%, but the stock and currency markets reacted coolly to India’s first cut in 5 years.

At the start of trading today, the INR did inch up. But once the RBI announcement was made about the rate cut, the currency immediately went back to yesterday's levels of 23.8.

But there are some who doubt whether a decline to 24 levels will happen soon. "Sure, there's been speculation INR has to drop to 24 soon - but I firmly believe it's unlikely now," said Antony Jos, Executive Director at Joyalukkas Exchange.