By James Mathew
Remittances to India are expected to fall if the rupee slide continues
Indian currency slipped to the negative territory on Wednesday after a 10-day run of firming up, losing 12 paise in the morning trading hours to reach 70.99 against the US dollar.
Foreign currency market analysts predicted rupee to continue the weakening trend in the coming days, slipping to 71.50 – 71.80 level against the greenback by the end of the month.
“Uncertainties – both in the Middle East situation and on the domestic front – continue, which could adversely impact rupee movement in the coming days,” Ajay Kedia, managing director of Kedia Commtrade and Research, told Arabian Business.
“We see rupee weakening to 71.50 - 71.80 against the US dollar in the next fortnight,” Kedia added.
Rupee closed flat at 70.87 against the US dollar on Tuesday, erasing the gains it made during the morning trading hours.
Rupee movement against the US dollar has a strong bearing on NRI (non-resident Indian) remittances to India, especially by expat Indians working in the Gulf region. UAE tops the list of countries from which India receives remittances.
The Indian currency hit a low of 72.40 at the beginning week of this month in the wake of a spike in crude prices after the US military action against Iran.
Since then, crude prices retreated from their high after both US and Iran hinted a softening of their stand on an escalation of tension. This has also led to rupee steadily appreciating against the US dollar for several days in the past week.
Currency market analysts said short and medium-term moving averages will act as a resistance now against a possible appreciation in the rupee against USD and a pullback is likely in the rupee value in the coming days.
“Bearish engulfing candlestick pattern on weekly chart suggests the weakening of the recent bullish trend in the rupee value against dollar and any pullback in the coming days might see the resumption of selling pressure,” a senior official with a Kerala-based private bank said.