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29 March 2024

Indian rupee hits Rs16.38 vs Dh1; Sensex at all-time high

Published
By Vicky Kapur

Having become used to a record weak Indian rupee against the US dollar and other major global currencies over the past year or so, Indian expats in the UAE and elsewhere in the world are now getting that sinking feeling as the Indian currency claws its way back from near oblivion.

The Indian rupee is trading at its strongest level against the UAE dirham (and the US dollar) in almost eight months, trading at Rs16.38 vs Dh1 (Rs60.56 vs $1) at 9am UAE time on Wednesday as the country seems to be enjoying windfall foreign investments.

Despite the uncertainty surrounding the imminent new Indian government’s composition and therefore its business and corporate policies, foreign investor confidence in Indian economy and shares is soaring, leading to the benchmark BSE Sensex index reaching an all-time high of 22,173 this morning (Wednesday, March 26, 2014), fuelling the rise in the rupee.

Even as further gains in the Indian currency remain capped by strong demand from oil firms, the Indian rupee is now stronger – and the NRI remittance power weaker – by 11.7 per cent in less than seven months. The Indian rupee made its lifetime low of Rs18.55579 vs Dh1 (Rs68.15541 vs $1) on September 3, 2013.

According to market analysts, there has been foreign institutional investment of $2.6 billion in Indian share markets in 2014, with a bulk of the investment – $2.3 billion – made in the month of March itself.

“Foreign funds have poured in $3.8 billion in domestic equities and bonds in March, sending indices to record highs,” says Subhash Gangadharan, an analyst with HDFC Securities, the brokerage arm of India-based HDFC bank. “Analysts have attributed the strong interest in Indian equities to expectations the opposition Bharatiya Janata Party would win elections due next month given its perception as being more business-friendly. Optimism about the domestic economy has also played a role, given easing inflation and a sharply narrower current account deficit,” he noted.

“Good funds flows and domestic data have helped the rupee gain. This could help the rupee to gain further towards 60 to the dollar. Technically, the USDINR pair remains in a downtrend after breaking its recent supports,” Gangadharan notes in his latest weekly currency report.

India’s Finance Ministry said yesterday that the country’s economy had stabilised, as evident from the strengthening of the stock markets as well as the rupee. India’s Economic Affairs Secretary Arvind Mayaram told reporters yesterday that economic growth is set to improve in the coming months.

“I certainly believe ... the economy has stabilised and that is reflected in rupee and stock markets. And going forward, I think, we will see growth numbers also improving,” he said.

“I think we are surely in a position where we can say that, India is among the best among the emerging markets, and this will continue to be so in future,” Mayaram added.