Rupee breaches 20 against UAE dirham

dubai — The Indian rupee on Tuesday plunged to an all-time low of 20 against the UAE dirham and analysts believe it will remain under pressure due to the South Asian country’s growing current account deficit amid higher oil prices.

Since the Indian markets were closed on Tuesday due to a public holiday, UAE residents were offered Monday’s closing rate of 19.85 at remittance houses. Expats may benefit while remitting today, when the Indian banks reopen.

On Tuesday, the rupee hit a record low of 20.02 against dirham, or 73.53 against dollar. Analysts believe dwindling capital inflows and rising current account deficit due to high oil import bills will keep the rupee under pressure.

dubai — The Indian rupee on Tuesday hit historic lows against the UAE dirham by crossing the psychological barrier of 20. The currency was exchanging at 20.05 in early trading and is expected to remain under pressure due to growing current account deficit. Analysts and experts said the Indian currency could fall between 20.4 to 21 against the dirham by the year-end.

Rajiv Raipancholia, CEO, Orient Exchange, said as per international rates, the rupee hit 20 against dirham but this cannot be taken as real market here in the UAE as the Indian markets were closed on Tuesday due to a public holiday. He said the UAE residents can get real rates only on Wednesday when banks and exchange companies resume work in India after the public holiday.

“Rupee is going to breach 73.00 level against dollar or 19.87 against dirham and move initially to 73.50 or 20.00 against dirham, when market opens on Wednesday unless there is an aggressive intervention by Reserve Bank of India,” Raipancholia added.

As for Indian expats, according to Sudhesh Giriyan, COO, Xpress Money, they stand to gain on the amount they are remitting back home due to favourable exchange rates. “It is an ideal time for NRIs to invest in the country and in-turn, pump more money into the economy.”

Vijay Valecha, chief market analyst at Century Financial Brokers, said US sanctions on Iran along with strong Asian demand means that oil prices are likely to remain higher and this indicates that pressure on Indian rupee is unlikely to abate.

“Under these circumstances, it would not be surprising to see rupee touching 20.60 and 21.10 against the dirham in next six months and one year respectively,” he said.

The rupee might test 73.60 mark against the US dollar. With a number of factors influencing the slide in the rupee and upcoming policy updates, we are of the opinion that the rupee might hover around 72.30-73.30 against the dollar by the year-end

Adeeb Ahamed, Managing director, LuLu Financial Group

The Reserve Bank of India’s minimalist intervention stance means pressure on the rupee. Dwindling capital inflows are insufficient to finance a current account deficit due to rising oil prices. This necessitates forex sales by the RBI to bridge the gap

Abhishek Gupta, India Economist, Bloomberg Economics

Any country that runs current account deficit, its currency will also come under pressure because simply the country needs to sell dollar to buy more of its own currency. So if the current account balance worsens, the pressure on currency can continue Anita Yadav, head of Fixed Income

Research at Emirates NBD

Owing to crude oil prices touching a four-year high, the rupee hit a new historic low by breaching the 20 mark against the UAE dirham. In spite of the RBI injecting liquidity into the market ... the rupee is likely to fall further and may touch 21 by the end of the year Sudhesh Giriyan,

COO, Xpress Money

Indian government has taken steps to curtail non-essential imports to reduce the current account deficit but further steps are required. If there’s any oil supply shortage during coming months, it is going to affect economy and rupee badly

Rajiv Raipancholia,

CEO, Orient Exchange