Stock Money exchange rupees
UAE dirhams and Indian rupees at Lulu Exchange in Sharjah Image Credit: Ahmed Ramzan/Gulf News

Dubai: The Indian rupee is on track to extend declines to a record-low 81 per US dollar by year-end and this implies the Indian currency will drop to 22 against the UAE dirham in the near-term as well.

The value of the Indian rupee versus the UAE dirham was at 21.57 on Wednesday, and at 79.65 against the US dollar. Check the latest forex rates here.

The Indian rupee continues to be under pressure against the US dollar and would trade in the range Rs 78.75-80, noted analysts at Indian lender Kotak Mahindra Bank in a report.

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.

According to the report, the Indian rupee continues to be weighed down by strengthening greenback continuously benefiting form the safe haven demand and US' monetary tightening bias despite the weakening growth outlook.

Stock Money Exchange
Customers at Lulu Exchange in Sharjah. Image Credit: Ahmed Ramzan/Gulf News

Some respite?

Providing some respite to the rupee was the fall in crude oil prices below $100 per barrel of crude oil (from the week's high of $114.8 per barrel) as fears of a potential global recession spurred concerns about oil demand.

Further, the rupee got some support as its central bank, the Reserve Bank of India (RBI), stepped in with measures to alleviate the dollar tightness.

The tug-of-war of diverging factors led to rupee trading in a narrow range of 78.87-79.38 against the US dollar.

According to the Kotak Mahindra Bank, given the uncertain and adverse global environment and weak external fundamentals, rupee is expected to continue to trade with a weakening bias. "We expect USD-INR to trade in the 78.75-80 range in the near term," the report added.

The Indian rupee hit a fresh record low against the US dollar on Tuesday as the US currency strengthened globally amid weakness in the global equities. At the interbank foreign exchange market, the partially convertible rupee hit a record low of 79.66 against the US dollar.