Remittances: Will Indian rupee drop further from current low of 22.66 to UAE dirham?

Remittances: Will Indian rupee drop further from current low of 22.66 to UAE dirham?

The INR-AED has been stuck at or close to these lows since mid-September. “But the Israel-Hamas conflict can still change everything, especially if India has to pay a higher price for its oil imports and thus straining the country’s dollar reserves,” said an FX analyst. “Then, we could see the rupee slip to 22.68-22.73 levels (or 83.32-83.48 in rupee-to-US dollar terms).” (India’s dollar holdings were $598 billion in August.)

Whatever be the case, for expat Indians, current levels are a definite plus. Even given the fact that the rupee has been relatively stable through the year compared to the 11 per cent plus decline in 2022.

“The Reserve Bank of India has been using its FX reserves to prevent the rupee from falling too much amid a strong dollar and relatively high oil prices,” said Bal Krishen, Chairman CEO of Dubai-based Century Financial.

“The Indian rupee lost less than 1 per cent of its value this year, while most other currencies in the emerging markets have suffered from the rise in US interest rates to their highest levels in years.

“Nevertheless, the near term prospect for the INR is bearish as the US Fed continues its policy of higher for longer stance on rates.