11.38 AM Friday, 29 March 2024
  • City Fajr Shuruq Duhr Asr Magrib Isha
  • Dubai 04:56 06:10 12:26 15:53 18:37 19:52
29 March 2024

Rupee at 1-month high: End of Indian expats’ remittance boon?

Rupee has seen a sharp decline in value since the beginning of this year. (Shutterstock)

Published
By Vicky Kapur

The Indian rupee firmed up for the fourth consecutive session this morning, surging above the psychological Rs15-mark against the UAE dirham and the Rs55-mark against the US dollar.

The rupee was trading at a five-week high of Rs14.92 against Dh1 at 10.20am UAE time today, witnessing an improvement of 4.3 per cent from its lifetime low of Rs15.59 vs. Dh1 that it made last month.

The rupee has been firming up recently on the back of good news emanating from the euro zone as well some concrete steps being undertaken by the Indian government to clarify taxation limits on foreign companies.

Click here to read ‘5 reasons why rupee will hit 50 by March’

In addition, the recent departure of the former finance minister Pranab Mukherjee, who will be contesting the upcoming Indian Presidential elections, has helped boost market sentiment as the finance portfolio is now being overseen by Prime Minister Manmohan Singh, an economist of repute.

In a recent report, India rating agency Crisil says there is a two-in-three chance that the rupee will appreciate to around 50 against the US dollar (Rs13.61 vs. Dh1) by March-end 2013.

An increase to those levels would imply that the rupee appreciates another 9 per cent in as many months. In comparison, the rupee was the worst performing Asian currency last year, and declined by almost 30 per cent from its 52-week high in August 2011 to its all-time low last month.

Click here to read ‘5 reasons why rupee will hit 50 by March’

The primary reasons for the rupee’s decline were its twin deficits in the current and fiscal accounts, both of which have been ballooning in recent years thanks to policy inaction at the local level and a worsening global economic landscape.

Crisil, however, believes that policy reforms at home and sustained softening in global commodity prices could lead to lowering of India’s current account deficit, which hit a record 4.5 per cent in the most recent quarter.
Indian PM has called for measures to revive the ‘animal spirits’ to get the economy back on its feet and change investor perception.

The Reserve Bank of India (RBI), the country’s central bank, has been making the right noises of late to attract international attention and investment.

“The RBI’s measures create scope for additional foreign inflows to come into India, which will materialise if the domestic policy environment and the risk appetite of foreign investors improve,” said the Crisil Research report.

“We assign a relatively higher probability to rupee settling at around 50/USD by March-end 2013,” the agency said in its report.

Click here to read ‘5 reasons why rupee will hit 50 by March’

(Image courtesy Shutterstock)