Dubai: The Indian rupee has touched a new mark against the dirham, trading at Rs20.24. The earlier low of Rs20.22 to the UAE currency was in October 2018.
Through the morning session Monday, the rupee was hovering in the 20.14-20.16 range.
Currency traders and exchange houses are now looking to the Indian central bank to come up with a response.
Will they let the rupee drop further? Or will they use the $476 billion in foreign reserves to prop it up?
If past statements are any indication, the BJP-led government has always advocated a “strong rupee” policy, and is likely to prod the Reserve Bank of India to take all necessary steps to prevent any further deterioration.
The coming hours will show the government’s hand one way or the other.
Now or later?
“The Reserve Bank of India will help steady the rupee should it go into a freefall from this point on,” said Adeed Ahamed, CEO of LuLu Exchange. “Particularly if it breaches the 76 level to the dollar (it is now at 74.28).
“Considering the present scenario, we estimate the rupee to range between 72.90-74.35 against the dollar.”
Non-resident Indians in the UAE, it seems, are not waiting to see whether the rupee will decline further and then send back remittances.
All through the weekend, there was a rush at exchange houses, as expat Indians tried to make full use of the Rs20.1 to dirham exchange rate.
“According to our figures, our Indian rupee volumes in the first seven days of this month are up close to 110 per cent,” said Anthony Jos, Managing Director at Joyalukkas Exchange. “That’s compared with the same period last year.”
Other currency houses in Dubai are also reporting significant increases in remittance volumes to India, right from the time the rupee dropped to Rs19.95 levels to the dirham.
Based on official data, average daily transactions (including all currencies) through local exchange houses was averaging Dh180 million a day last year.