Indians gain as rupee dips to 13-month low
AS CURRENCY TOUCHES 18.096, EXPATS RUSH TO EXCHANGE HOUSES TO REMIT MONEY EVEN BEFORE RECEIVING SALARIES FOR THE MONTH
Remittances up as currency touches 18.096 against dirham
After months of stability, the Indian rupee is sinking again due to higher oil prices, experts said yesterday. The rupee yesterday hit its lowest level in 13 months at 66.47 per dollar, extending its fall for a sixth day. The rupee hit 18.096 to the dirham.
Indian expats are taking advantage of the situation. Many have started rushing to exchange houses to send money home, though salaries have not been received yet.
“Whenever there is a depreciation of Indian rupee, we have always seen people taking advantage of the situation,” said Promoth Manghat, CEO of UAE Exchange Group. He said exchange houses have been witnessing more remittances to India after the rupee started its fall in the past week. “We see around an 8 to 10 per cent increase in remittances … That is the kind of pattern we see.”
“The rupee’s fall has to do with rising oil prices, which pressure the balance of payments. When the import bill goes up, there is a higher outflow of foreign exchange, which leads to a balance of payments issue,” Sudhesh Giriyan, chief operating officer at Xpress Money Services Ltd told Gulf News.
The Indian currency had been stable due to similar moves in oil prices, but with Brent exceeding $70 per barrel, many economists expect a higher import bill for India, which imports 90 per cent of its oil requirements.
Merchandise exports fell 0.7 per cent on year to $29.1 billion — its first fall in five months — and the trade deficit widened to $13.7 billion, according to government data.
Decent level
“Sentiment continues to be in favour of a further fall of the rupee, but it’s difficult to predict the price level. From a remittance point of view, 18.03 is a decent level,” Giriyan said.
The rupee has lost nearly 4 per cent of its value this year, and it is the second-biggest loser in the BRICS group. “The dollar is in demand, and the rupee has to weaken naturally, so there is no question for the RBI to intervene. We didn’t see an intervention from the regulator when the rupee was at a much worse level,” said a dealer with an exchange house, who did not wished to named.
The Indian rupee hit a record low of 68.86 to the dollar about a year and a half ago.
“We expect more weakness in the rupee. The first level that needs to be watched is 66.90, and then 68,” said an analyst with a local markets advisory firm.