Dubai: For Indian expats in the UAE it is turning out to be the time to remit as the value of the Indian rupee dropped by 14 paise against UAE dirham on Wednesday. It was on track for its third straight session of decline.
Dubai-based forex analysts opined that the currency was expected to weaken further on higher crude oil prices and a stronger dollar in overseas markets. Check the latest UAE money transfer exchange rates here.
After closing at Dh20.25 against the UAE dirham on Tuesday, the rupee rate was at Dh20.39 on Wednesday, indicating a bigger-than-expected drop in the coming sessions.
At the interbank foreign exchange market, the Indian currency opened at 74.60 against the greenback and witnessed an intra-day high of 74.57 and a low of 74.80 during Tuesday's session.
Tuesday was the second straight session of loss for the rupee and the lowest closing level since December 27, 2021. The rupee has declined by 33 paise against the US currency in two days.
Weakness in the rupees value against the dollar will be automatically reflected in its exchange rate with the UAE dirham as the UAE currency is pegged to the dollar.
Analysts opined that the Indian rupee depreciated and settled at a one-month low tracking the weak regional equities and currencies which also extended losses on Tuesday on the likelihood that the US central bank will normalise monetary policy at a faster pace. Indian financial markets are closed on Wednesday for Republic Day.
The rupee also weakened on the back of risk-off trades amid the potential for military conflict between Russia and Ukraine. Moreover, stronger crude oil prices also weighed on sentiments this Tuesday.
Trade deficit has been keeping the currency under pressure and even FPI (foreign portfolio investment) outflows have been a constant pressure on the rupee. A rate hike by the US can potentially drive away more foreign institutional investor (FII) money from India and other emerging markets.
Omicron normalisation would also lead to demand revival and thus more imports and more pressure on the rupee, analysts further noted, while adding that crude oil prices around $90 to a barrel is a warning bell for commodity price rise in the time to come.