Dubai: The Indian rupee continued to take a beating from the US dollar on Tuesday and has now fallen to a record low against the UAE dirham.
As of 9:46 am, the Asian currency was valued at 20.08 against the UAE dirham and 73.2 against the US dollar.
The rupee’s drop against the greenback is the lowest in approximately 10 years, or since October 5, 2008, according to the data collated by Xe.com.
This is good news for the hundreds of thousands of Indian expatriates who remit money from the UAE, as it means that their dirham can now buy a lot more Indian rupees compared to a decade ago. That's approximately 20,000 rupees per Dh1,000, at the current exchange rate.
“This is the best rate so far and this is good news for Indian expatriates who want to remit money,” a source at an exchange house in Al Wasl told Gulf News.
10-year chart shows exchange rate history of the rupee versus the US dollar. (Xe.com)
The rupee has been the weakest currency in Asia, having depreciated 11.7 per cent against the greenback as of September 4 this year.
Money transfer operators in UAE have said that a stronger US dollar is a boon for expatriates in the UAE.
“Non-resident Indians can make the most of the currency decline as they can avail [themselves of] better exchange rates while sending money back home,” Sudhesh Giriyan, COO of Xpress Money said earlier at the start of the rupee’s decline.
According to Yogesh Khairjani, investment research analyst at Century Financial, the rupee is languishing against the US dollar because it is facing pressure from the “monetary divergence between the United States and India. The rise of the oil price is contributing to the downtrend.
“Indian rupee breaking the 20 barrier against the UAE dirham is not an unexpected event, it is in line with the underlying fundamentals as well as prevailing trend. Crude oil, India’s biggest import component, further aggravated matters by breaking into new highs,” Khairjani told Gulf News.
“Brent crude Oil at $85 is good news for UAE, but for a consuming country like India, it is inflationary as well as a drain on foreign exchange reserve.”
“The monetary divergence between US and India is creating pressure on rupee with US Federal Reserve seen to be on a more aggressive rate hike path when compared to RBI.”
Sudhesh Giriyan, COO of Xpress Money, said the decline could impact the export industry in India..
“Exports from the country will increase and the lower exchange rate will also boost tourism to the country,” Giriyan said.
“As for Indian expats, they stand to gain on the amount they are remitting back home due to favourable exchange rates. It is an ideal time for non-resident Indians to invest in the country and in turn, pump more money into the economy."