Dubai: When it comes to sending money back home, it is vital to know whether it is currently an ideal time to remit. So if you were wondering whether or not you should send Indian rupee back home now or wait a bit, here's what analysts are saying.
Against the UAE dirham, the Indian rupee is expected to stay range-bound at around 22.2 in the coming weeks, before edging up later, so remit soon to take advantage of rates. The currency was currently at 22.2. Check the latest forex rates here.
The Indian rupee will remain at its current level three months from now and gain only marginally by the end of February 2024, barely recouping any of its losses from last year, a Reuters poll of foreign exchange strategists found.
Rupee to drop further?
Against the US dollar, the Indian rupee was at 81.69. It is expected to trade at 83.48 by the end of this quarter, according to Trading Economics' analysts expectations. The analysts estimate it to trade at 85.70 in 12 months time.
Any weakness or strength in the Indian currency's value against the US dollar will be automatically reflected in its exchange rate with the UAE dirham as the UAE currency is pegged to the dollar.
The rupee has steadied after falling more than 10 per cent in 2022, when it was one of the worst performing Asian currencies. It is expected to trade at 82.54 per dollar at the end of May, according to the median forecast in a February 28-March 2 Reuters survey of 34 respondents.
In the near-term, much will depend on global interest rates, mainly driven by the US dollar. The Reserve Bank of India (RBI) is nearing its one last 25 basis point hike expected in April. The US, however, is expected to continue raising rates at least into the middle of the year to tame sticky inflation.
More pressure on the rupee
"The dollar is strengthening once again, and if the US continues hiking it will definitely be beneficial for the dollar and there will be pressure on the rupee," said Aditi Gupta, an economist at Bank of Baroda.
More than one-third of poll respondents, 12 of 34, said the rupee will slide to 83.00 per dollar or weaker by the end of May, with seven respondents predicting a new lifetime low.
Only seven respondents answered an additional question on the weakest rate the rupee will fall to over the next three months, with just three predicting 84.00 or lower.
The currency could edge back to 81.50 a year from now, a gain of just over 1 per cent, the poll showed, far from recovering an almost 9 per cent drop since the end of February last year when it stood at 75.34.
Rupee to recover slightly in 2024
The RBI likely intervened to shore up the rupee after it hit an historic low of 83.26 in October last year, with foreign exchange reserves dropping to a more than 2-year low of $524.52 billion.
Market participants believe the central bank has continued intervening in the past month and will continue to do so, with reserves hitting an 11-week low of $561.27 billion in mid-February.
"Currently, the RBI is protecting the 83 level, but it would be very difficult going ahead," said Tarun Sangtani at Vadilal Forex, one of the most accurate forecasters on Asian currencies last year according to StarMine SmartEstimate calculations.
"At a certain point of time they will be out of the market and then the rupee will depreciate once again."
