Indian rupee
Rupee's sticking to a range now, even as NRIs wait for it to go back to 20 and over to a dirham. Image Credit: Shutterstock

Dubai: Indian expats in the UAE will have to make do with the rupee at 19.75-19.87 levels for now, with India’s central bank retaining interest rates at 4 per cent.

“The RBI did what was widely expected and maintain its accommodative stance on rates,” said a senior official with the treasury operations at LuLu Exchange. “We feel that in the near future - i.e., for a week - the rupee might not go below 72.75 and might test 72.35 on the other side, which translates to 19.76-19.98 against the dirham.”

The rupee had been gaining in recent weeks, so much so, many in the market was expecting the RBI to intervene and soften it somewhat. A softer rupee would work better from an export perspective... as well for NRIs wanting to send funds back home.

India's central had dropped the base rate by 115 points since February  2020.

India Rupee Graph
After dipping lower last year, the rupee's gained some of its footing back. For NRIs, the question is when will it go back to 20 and more levels to the dirham. Image Credit: LuLu Exchange

Steady as it goes

Even after the February 1 Budget announcement, the rupee was trading in a tight band. Volatility was markedly absent. “Against the dirham, the rupee moved between 19.76-19.88 on February 1,” the spokesperson added.

75rupee

What the rupee was going for against the dollar on March 19, 2020... Lowest point ever

But markets zoom

Rupee’s passivity comes even as India’s stock markets kept pushing even further into record territory. The Sensex was at 50, 859 at 11.20am India time, up 245 points.

"In the short term, rupee is likely to be volatile as foreign portfolio investors press for sales in the stock markets to book profits," said Siddarth Razdan of Indianivesh Firstbridge, the fund manager."Plus, oil price increases could also play a dampener on the rupee. But for now, the overall dollar liquidity in the Indian system is comfortable.

"But one would expect rupee to strengthen once the  portfolio and FDI flows pick up again."

With consumer inflation still trending at the upper end of the apex bank’s band, and the policy repo rate also substantially reduced by 115 basis points since February 2020, RBI kept the rates on hold, with an eye on how the inflation and the economic recovery pans out in the coming months

- Anuj Puri, Chairman of Anarock Property Consultants