Will Indian rupee hit Rs17 vs UAE dirham?

The Indian rupee opened weaker on Thursday, depressed by the general US dollar strength and the impending oil payments, especially to Iran.

According to reports, India has agreed to pay a third tranche of $400 million (Dh1.47 billion) to Iran as early as today, ahead of a November 24 deadline to an interim deal with six world powers that allows Tehran to recover part of its overseas frozen oil revenues.

At 9:30am UAE time (0530 GMT) on Thursday, the Indian rupee was trading at Rs16.92 versus the UAE dirham (Rs62.17 vs $1), after falling to as low as Rs16.94 vs Dh1 (Rs62.22 per dollar), its lowest level since February 20.

However, it recovered to Rs16.86 vs. Dh1 by the end of the day. Will it breach Rs17 against the UAE dirham on Friday?

According to Promoth Manghat, Vice-President, Global Operations at the Abu Dhabi-based UAE Exchange, one of the world’s largest remittance companies, the Indian rupee is a depreciating currency and has been losing value since many years.

“Historically, the Indian rupee has been a depreciating currency, declining by between 6 and 7 per cent every year,” he told Emirates 24|7 before the latest decline. However, he asserted that he doesn’t see a freefall in the currency unless the US dollar “becomes too strong”.

Click here for the latest currency exchange rates in the UAE

Fluctuations in the exchange rate matter to expatriates in the UAE and elsewhere since a favourable rate (weakness in currency of destination) means that they are able to remit more money back home, or simply more savings and investments in their home country.

The recent weakness in the Indian rupee and a host of other expat currencies, including the Philippines peso, is good news for millions of foreign workers in the UAE – as well as several more millions who live and work in other GCC countries with dollar-denominated currencies, as well as those in the US and Canada.

The UAE remittance corridor to the Indian subcontinent is one of the busiest remittance corridors. Keeping the competition in mind, exchange houses in the UAE maintain low transaction fees and offer regular sops to attract expats from that region.

Xpress Money, for one, launched a value-added service for its customers in Pakistan. Launched in association with Easypaisa, the service offers doorstep delivery of remittance money to customers residing in Karachi (selected areas), Lahore, Islamabad and Rawalpindi.

Data from Al Ansari Exchange, another remittance house based in the UAE, shows that UAE expatriates remitted nearly Dh130bn in 2013, with Indians and other South Asians dominating the charts.

Around 80 per cent of the total remittances were made by individuals while the rest were in the form of corporate transfers, the exchange said, adding that India received the largest dose of remittances from the GCC.

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