Indian rupee
Indian rupee Image Credit: Bloomberg

Dubai: The Indian rupee is treading in the Rs20.64/20.65 range to the dirham on Wednesday (March 2) afternoon, down from the RS20.50 it closed on Monday. Clearly, the rupee is feeling the volatility from the Russia-Ukraine situation, as did most other major currencies. (The Indian market was closed on Tuesday because of the Mahashivrathri festival.)

US President Joe Biden’s State of the Union speech has so far done nothing to still investors’ concerns, whether it is in the commodities market – oil and gold are on the rise – and on the currency and stock markets. The Sensex is down by 700 plus points, recovering slight in the afternoon session from the day’s lows.

That’s only part of it - anyone interested in the Indian rupee’s situation have to wait for another outcome, one that will be played out within the country. “The results of the latest round of state elections, including the one in Uttar Pradesh, will be decided by March 10, and that’s the time when the rupee could come under more pressure,” said Antony Jos, Managing Director at Joyalukkas Exchange.

“If there is any uncertainty as a result of these election results, it will show up on the rupee.” The Indian central bank has, according to market sources, so far not made any sustained intervention in the currency markets to stabilise/firm up the rupee.

According to remittance houses, the next drop of the rupee could take it to Rs20.77 against the dirham. Remittance volumes from the UAE in the first two days of March are at increased levels compared with the same period in the last two months.

“Anything in the Rs20.55-Rs20.65 range will have anyone holding back on the next remittance want to come in,” said an official. “We have been seeing some of that in these 48 hours.”