Dirham remittances will definitely fetch a lot more today in rupees. Official exchange rate is at 20.60. Image Credit: Supplied

Dubai: The Indian rupee has slipped into Rs20.70 to the dirham range, and will trigger a further rise in remittance volumes in the next 48 hours. The rupee’s slide mirrors the devastation on the Indian stock markets, with the Sensex’s drop going past 1,000 points.

“If current sentiments persist through the rest of the trading hours, we could close the week with rupee around Rs20.76 in the inter-bank trading,” said a treasury analyst at LuLu Exchange. “This morning, the official exchange rate for remittances from the UAE is between Rs20.58-Rs.20.60.”

This is the highest point the dirham-rupee exchange rate has touched in the year-to-date, with the previous being the Rs.20.48 on January 28. (In comparison, the lowest point has been the Rs20.08 on January 12.)

Will it be 21 soon?
Each time the rupee has weakened in recent months, the question has been whether it will touch 21 to the dirham. The current lowest is the Rs20.88 on April 20 of 2020.

With the US signalling higher interest rates and oil prices steadfast at well over $100 a barrel plus, the Indian economy could be in for a rough ride.

Perfectly timed

For UAE’s Indian expats, the further weakening of the rupee could not have come at a better moment. Many are still holding their February salaries in their accounts as they played the waiting game for further drops. And they got that on Friday. The rupee had been relatively stable for the initial few days of the Russia-Ukraine conflict. But with the fighting escalating to major cities in Ukraine, the dollar has been gaining strength as a safe haven, along with gold.

Currency traders say that next week could be just as volatile for the rupee – and Indian stock markets. Major states such as Uttar Pradesh and Punjab will be announcing election results, and any changes to the political dynamics there will play out on the currency too.