The COO of Xpress Money said the exchange rate means its an "ideal time" for expats in the UAE to send money home
With the Indian rupee on the verge of hitting a historic low by breaching the 20 mark against the UAE dirham again on Wednesday, experts are warning that the currency will likely fall further by the end of the year and into the first quarter of 2019.
On Wednesday morning, the rupee stood at 19.96 to the dirham, and 73.71 to the US dollar, after having fallen to 20.05 against the dirham on Tuesday.
On Monday, the Reserve Bank of India announced that it would inject a total of 360 billion rupees ($4.95 billion) of government bonds into money markets to prevent a credit crunch.
Sudhesh Giriyan, the chief operating officer of Xpress Money, said that the move is unlikely to prevent the rupee from falling further.
“In anticipation of trade tariff hikes and an increase in the new interest rates by the US fed, the emerging market currencies remain volatile,” he said. “In spite of the likely intervention by RBI in terms of injecting liquidity in the market by purchasing government bonds in October, the rupee is likely to fall further and may touch 21 against the UAE dirham by the end of the year.”
From an economic standpoint, Giriyan added that the decline may have a positive impact on India’s export industry as exports from the country from rise and its tourism sector may benefit from the lower exchange rate.
“As for Indian expats, they stand to gain on the amount they are remitting back home due to favourable exchange rates,” he added. “It is an ideal time for NRIs (non-resident Indians) to invest in the country and, in-turn, pump more money into the economy.”
Similarly, Promoth Manghat, the executive director and group CEO of Finablr, said that the rupee has been “hit considerably” this year by rising global crude oil prices, debt outflows from India, US Fed rate hikes and the strength of the dollar against other currencies.
“Looking at the present dynamic conditions, both economic and political, and the forthcoming Indian elections next year, we expect the rupee to slip further by Q1 2019,” he said.