Indian rupee at 2-year low; Philippine peso at 6-year low

The US dollar gained over the weekend against major expat currencies on the back of an oil price decline and concerns over individual economies.

On Friday, December 11, the Indian rupee (INR) fell to a two-year low of INR18.29 against the US-dollar-pegged UAE dirham, about 25 paisa (1.3 fils) short of its all-time low of Rs18.55 vs Dh1 made in late August 2013.

The Philippine peso (PHP), on the other hand, declined to PHP12.927 vs Dh1 on Friday, its worst closing since November 5, 2009.

The US dollar been gaining against major global currencies on the back of an almost certain US interest rate hike, which is bound to dampen demand for developing-nation assets.

The Indian rupee, which has now breached the Rs67-mark against the US dollar, may fall to an all-time low of INR18.78 against Dh1 if the current trend continues, analysts believe. 

“The level of 67.26 [against US dollar] is acting as an immediate hurdle for the pair. If it manages to surpass it, then it could continue further towards 69 levels in short term,” Gajendra Prabhu, Technical Research Analyst with HDFC Securities, says in his latest currency report.

Tracking the technical charts, he said that, overall, the [USD-INR] pair is heading towards its life high of 68.80 and above.

Among other major expat currencies, the Pakistani rupee (PKR) declined to a one-year low of PKR28.75 vs Dh1 on December 7 while the Sri Lankan rupee (LKR) made an all-time low of LKR39.06 vs Dh1 on Friday, December 11.

Meanwhile, the Bangladeshi taka (BDT) made an almost 3-year low of BDT21.62 vs Dh1 last month (November 18). It last traded below these levels in January 2013.

This seems a good opportunity for expats in the UAE and across the dollar-pegged world to remit bulk money home even as analysts see a further deterioration in global currencies going forward.

Globally, market sentiments remain jittery with the US Federal Reserve’s two-day meeting this week, with almost all economists and analysts expecting the Fed to announce its first interest rate hike in more than nine years.

The last time the Fed raised rates was June 2006, and the US central bank has been keeping the interest rates close to zero ever since the global financial crisis of 2008/09. The low interest rate and the three tranches of accompanying quantitative easing programme meant that a chunk of the freshly minted dollars found their way into emerging market assets, lifting those markets.

The two-day meeting that starts on Tuesday will likely see the imminent announcement on December 16 (Wednesday), and emerging markets are gearing up to face the new era of tighter liquidity going forward.

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