A man counts Indian rupee notes inside a shop in Mumbai. Image Credit: REUTERS

Dubai: The rupee dived into record-low territory on Thursday, providing more remittance power to Indian expatriates in UAE.

The Asian currency traded at 20.08 against the UAE dirham and 73.75 against the US dollar as of 9:51am. It plunged further to 20.09 per dirham and to 73.81 against the greenback by 10:53am, the lowest since at least ten years, data compiled by Xe.com showed.

Since January 1, 2018, the currency’s value has eroded 15.53 per cent against the UAE dirham.

The rupee has been posting new record lows this year on the back of a strong US dollar and high crude oil prices, making it the worst performing currency among the fast-growing economies in Asia. Its Asian peers, the Philippine peso and the Indonesian rupiah, have taken a beating from the US dollar as well.

“[High crude oil price] is good news for UAE but for a consuming country like India, it is inflationary as well as a drain on foreign exchange reserve,” noted Yogesh Khairajani, investment research analyst at Century Financial.

Ten-year chart shows the Indian rupee's performance against the UAE dirham. (Xe.com)

The weakening of the Indian currency has also been due to interest rate adjustments by the US Federal Reserve and high external debt borrowings by Indian residents.

The trade war between the United States and Turkey, which has made tariffs on Turkish aluminium, steel and other commodities more expensive, is putting a pressure on the rupee as well. Then there’s the forthcoming elections in India that isn’t likely to provide support for the battered currency.

“The monetary divergence between US and India is creating pressure on rupee with the US Federal Reserve seen to be on a more aggressive rate hike path when compared to [the Reserve Bank of India],” added Khairajani.

Then there’s the forthcoming elections in India that isn’t likely to provide support for the battered currency.

“[The] emerging market currencies, especially the Indian rupee, have been hit considerably this year due to rising global crude oil prices, trade war, debt outflows from India, US Fed rate hikes and dollar strengthening against other global currencies,” Promoth Manghat, executive director and group CEO of Finablr, told Gulf News.

“Looking at the present dynamic conditions, both economic and political, and the forthcoming India elections next year, we expect the rupee to slip further by [the first quarter of 2019],” said Manghat.

Other analysts had earlier predicted that the rupee call sink further and hit 21 against the UAE dirham by December.

Worst performing Asian currencies (Percentage of decline versus US dollar from January 1, 2018 to September 4, 2018)

Currency: rupee
Year-to-date decline: 11.7 per cent

Currency: peso
Year-to-date decline: 7.39 per cent

Currency: rupiah
Year-to-date decline: 9.04 per cent

Currency: yuan
Year-to-date decline: 4.97 per cent

Korea: 4.46 per cent

Taiwan: 3.46 per cent

Singapore 3 per cent

Vietnam: 2.65 per cent

Malaysia: 2.31 per cent

Japan: 1.03 per cent

Thailand: 0.64 per cent

Hong Kong: 0.45 per cent