By Sarah Townsend
Indian rupee hit eight-week high on Thursday, experts warn of ongoing volatility
The Indian rupee and other Asian currencies are depreciating against a strong US dollar – good news for Indian, Filipino and other expats sending money back home, currency houses have commented.
Last Thursday, the Indian rupee hit its highest level in eight weeks, Rs67.21 per dollar, from a record low of Rs68.89 per dollar in November.
But while the currency may continue to fall this year, the rate provides good opportunities for Asian expats based in the UAE, said Sudhesh Giriyan, COO of Xpress Money.
He told Arabian Business: “The Indian rupee has been seeing a good amount of depreciation against a stronger and stronger US dollar – to as much as 18.65 to the AED, and anything more than 18.3 is very decent.”
He added: “Lately the US dollar has got stronger and stronger and the consequences of this is that the dirham – pegged to the US dollar – has too, and most South Asian currencies have depreciated along with it [including Indian rupee, Pakistani rupee and the Filipino peso].
“Right now, the Indian rupee is at a very good level and for white collar expats especially, who are capable of sending large amounts of remittances home, this is good news for them.”
Giriyan noted that the US dollar would continue to be strong in the short term so Asian currencies are expected to depreciate further. Expats seeking to send remittances to their home countries are likely to get even better deals if they wait a few weeks, he said.
“Currently the level of trading is very decent – the best we’ve seen in a while – but it’s likely to get even better over the next few weeks.”
But Promoth Manghat, CEO of UAE Exchange, said the rupee may remain volatile in the short term – a clear-cut depreciation trend was not certain.
“[The Indian rupee] reached 18.60 in January. We did see some high net-worth transactions initially but gradually remittances to India got back to being steady and flat.
“NRIs [non-resident Indians] were expecting an interest rate cut in India due to the US dollar weakening and new administration in the US.
“Also, ample liquidity in the system generally drives down the rates in India. But the Indian government held on to the rates and maintained prudence in the budget.
“The impact on the rupee is more weighted on dollar fluctuation than budget reasons. Uncertainty is likely to stay as the rupee could remain volatile.”For all the latest banking and finance news from the UAE and Gulf countries, follow us on Twitter and Linkedin, like us on Facebook and subscribe to our YouTube page, which is updated daily.