Remittances from the UAE to India are on the rise ever since the rupee hit 18 against the dirham recently.
The Indian rupee could fall to 18.75 against the UAE dirham despite increasing remittances to the country, according to industry executives.
The analysts forecast that if the rupee falls below the key psychological level of 18.75, it could possibly slip into freefall and hit 20 against the UAE dirham in the coming months. They said remittances from the UAE to India are on the rise ever since the rupee hit 18 against the dirham recently.
Vijay Valecha, chief market analyst at Century Financial Brokers, said the Indian rupee seems to be on a steady and continuous fall and should be very soon testing the all-time low of 18.75 which was made in 2016.
“This level once broken could prove disastrous for the Indian rupee, which could then go into a freefall and even touch a level of 20 against the dirham. The range expected for the coming months is between 17.5 and 20. We expect volatility to remain for the remainder of the year in all major currency pairs,” Valecha added.
Rajiv Raipancholia, CEO, Orient Exchange, said Indian expats had started remitting once the rupee crossed 18 against the dirham.
“More big ticket remittances are expected with the rupee crossing 67 against the dollar [or 18.25 against the dirham]; we are already seeing big tickets for remittances. At the same time, the rising crude price and strength of the US dollar may lead to further fall in the rupee,” he said.
Going by the way the rupee is falling, Raipancholia sees the currency possibly going down to 18.40-18.45 in a couple of days because there is no intervention from the Reserve Bank of India.
On Tuesday, the Indian rupee had recovered to 18.25 against the dirham after falling to 18.31 earlier in the day.
Raipancholia said the rupee is range-bound, so it may not recover much and go back to the 18.05 level any time soon.
He attributed the decline in rupee to US dollar strength as greenback is strengthening against all other major currencies such as euro, pound etc.
Valecha noted that the volatility is mainly being caused because of the rebound in the US dollar, which is causing all currencies to go for a toss. The US Federal Reserve policy in the coming months along with crude prices will be the major factors dictating the Indian rupee movement, he added.
Source: Khaleej Times