Dubai: The Indian rupee is expected to be get weaker this week, with the currency's depreciation seen impacting the economy and various segments such as imports, mainly fuel prices, and push up inflation.
Against the UAE dirham, the value of the Indian rupee was at Rs21.11 on Thursday, dropping from prior session's 20.98. The currency hit a record low on May 22 at Rs21.19. Check the latest forex rates here.
However, expats are still expected to get between 20.95 and 21 for every UAE dirham at their exchange houses. The Indian currency has been under-pressure after global central banks started normalising policy.
The rupee closed at a record low of 77.72 against the dollar on Thursday, a loss to over 6 per cent in the last one year as it gets weighed down by rising inflation, interest rates, exit of foreign investors and plunging markets.
Weakness in the rupee'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.
Why is the Indian rupee falling?
Since the Russia-Ukraine conflict began in late February, the rupee has depreciated about 4 per cent cent while currencies in other emerging markets have depreciated 4 per cent to 7 per cent.
The rupee has been hitting fresh all-time lows of late due to a rise in the US dollar index and concerns around global economic growth. Analysts are currently of the opinion that the weak economic data around the world, particularly in China, has put pressure on the US dollar index, which hit a nearly two-decade high.
Market participants fear that tightening of monetary policy across major countries in globe to combat high inflation, may prompt foreign investors to pump out liquidity from emerging markets.
Currently there is an outflow of funds as investors move funds to high-yielding investment instruments. The analysts further evaluate how the Indian rupee is seen depreciating this week on strong US dollar and elevated crude oil prices.
USD-INR spot exchange rate is expected to trade in a range of 77.45-77.75, noted analysts at India-based ICICI Direct.