Dubai: With the Indian rupee slipping below 20 for the dirham, and some of the other Asian currencies losing too much ground, UAE’s remittances are set to experience a sharp rise this week. It was last Friday that the rupee lost ground after maintaining the levels of 19:30 to 19.50 against the dirham and fell to 20 plus.
That in itself should have triggered an immediate increase in remittances to India, but “many NRIs waited until their February salaries were credited before doing so,” a banking source said. “Moreover, many are hoping that the rupee’s decline may continue this week before the shipment.”
Early Monday (March 1) the rupee was at 73.59 to the dollar, 20.03 to the dirham.
It was in April of last year that the rupee fell to its lowest point. He was at 76.8 on April 16 and on April 22 he briefly tested 76.90.
The same feelings of expectation and watchfulness could be observed in reserve for other remittances. On February 25, the Philippine peso was at 49.08 per dollar and has since slipped to 48.76. The Pakistani rupee is trading at 157.75 per dollar, rising from just over 160 on February 1.
“All major currencies have lost more than 100 to 140 basis points against the dollar,” said a senior LuLu Exchange treasury operations manager. “As for the Indian rupee, we can expect to see a bit more weakness as Indian stocks could see further corrections as well.”
That’s right, after hitting over 50,000 points, the benchmark index of the Indian stock market has come under pressure in recent days. This week could be crucial as foreign funds could engage in profit taking and withdraw them from markets / countries. This will increase the pressure on the rupee.
“We believe the rupee could see 73.67, 73.84 and 74.08 per dollar in the next few days before moving to a smart recovery,” said the head of LuLu Exchange. “Then it could evolve between 72.83-74.08, or 19.76-20.16 against the dirham.”
- On January 1, 2020, the Rupee opened at 71.30 per dollar.
- The lowest level it dropped to was 70.73 on January 14, 2020.
- On March 19, 2020, the rupee was at 75.28.
- In April 2020 it was 76.80 and on April 22 it was 76.90.
Economy on the mend
Besides the stock markets – or more specifically what foreign funds do – NRIs should also monitor all updates on the Indian economy. During the phase from October to the end of December, the economy returned to growth, albeit marginal at 0.4%. But it’s still a huge positive after the deep contractions of the previous two quarters.
The general consensus is that the rupee will not be subject to the kind of severe tension that existed during the March-July phase of last year, when lockdowns due to the pandemic severely disrupted the chances of growth.