7.05 AM Monday, 15 July 2024
  • City Fajr Shuruq Duhr Asr Magrib Isha
  • Dubai 04:10 05:35 12:28 15:50 19:15 20:39
15 July 2024

NRI alert: Remittance bonanza as rupee hits 18.75 vs Dh1

By Vicky Kapur

The Indian rupee fell to record lows of 68.85 to the dollar (18.74 to the UAE dirham) on Friday, February 19, 2016.

Analysts and traders expect the rupee to continue trending lower in the weeks and months to come.

“The rupee may go much weaker in the weeks to come,” Sudhesh Giriyan, COO of remittance powerhouse Xpress Money, told this website on Thursday.

“The time may have come for the rupee to test the intra-day lifetime low of 68.85 USD/INR [18.75 AED/INR] sometime soon,” he had told this website. As if on a cue, the rupee did achieve that level the next day, on Friday, before improving to 68.76 against $1 (18.72 vs Dh1) by the close of the day. 

According to Giriyan, once the rupee crosses that rate (68.85 vs $1), the next support level will be at 69.20 USD/INR (18.84 AED/INR) and he wouldn’t be surprised if it breaches the Rs19 vs Dh1 level by the end of the month.

Xpress Money expects a 15 to 20 per cent surge in remittances this month compared to last month. “We expect white collared Indians, who may have been waiting for this rate, to remit in bulk now,” said Giriyan, adding that there’s every likelihood of the rupee falling to fresh lows in the next few days.

“Banks in the UAE have been targeting Indian professionals with personal loans, specifically with the background that the rupee has been declining,” he says. “we expect that to result in additional remittance.”

Xpress Money, he says, runs periodic marketing campaigns when the rupee breaches fresh lows, in addition to cashback programmes and referral campaigns to boost remittances.

A worsening global environment coupled with worries about a slowdown in the Chinese economic growth and the US Federal Reserve’s interest rate hikes are all factors affecting rupee’s current movements.

“[Indian] stocks are falling and foreign investors have been pulling out funds from the country for some time now,” he lists as possible reasons that will continue to impact the fortunes of the rupee.

A report in Indian financial daily ‘Economic Times’ quoting provisional data from the Bombay Stock Exchange shows that foreign portfolio investors sold equities worth Rs9.64 billion (about Dh514m) on Tuesday.

In addition, the Hindu Business Line, another Indian business daily, said forex outflow were combined with an increased demand for the dollar from importers, making the rupee trend even lower.

The currency has been fluctuating over the past year or so, slipping by almost 12 per cent in as many months, and experts believe it’s set to fall further.  

The RBI seems to be happy to let the rupee slide, says Giriyan, terming it as a wise move. “You see most Asian currencies have been weakening, so it wouldn’t make sense for the RBI to try to strengthen the rupee in such a scenario,” he said.

A weak rupee is good news for India’s exporters and service firms with overseas clients, who can afford to sell their products and services at competitive rates if the rupee weakens.

According to Reuters, foreign investors have been net sellers in the first two months of 2016, pulling $2.2 billion (Dh8bn) from India’s debt and equity markets, but those outflows come after they had bought a net $12.2 billion (Dh44.8bn) in 2015.

The upcoming Indian budget, scheduled for February 29, is another factor playing on market players’ mind, said Giriyan, adding that the market may be currently lacking in confidence.

“Even if the budget is a balanced one, the rupee hasn’t been going down only recently in response to any one news event – the trend has been lower generally,” he says.

Tags: #Rupee #India #UAE #Dubai #Remittance #Investing #Borrowing