Dubai: The Indian rupee has firmed up immediately after the markets opened, trading at 23.47 to the dirham. In the process, it has lost some of the weakness shown after Wednesday’s announcement by the RBI (Reserve Bank of India) of a second rate cut by 0.25%. (The Indian markets were closed yesterday because of ‘Mahavir Jayanti’.)
“There had been heavy remittance volumes in the UAE and India corridor in the last two days, with the INR at 23.55,” said Neelesh Gopalan, Senior FX analyst based in Dubai. “Typically, the INR comes under pressure after an interest rate cut by the RBI – but everything is different these days.”
What’s different is the Trump tariff dynamic to the global markets – stocks, currencies, trade, gold, everything.
This morning, the Dollar Index started weak and has gotten weaker. It is a measure of the dollar’s relative strength against a set of other currencies.
Currently, the Dollar Index is under 100, levels that haven’t been seen in a while. Here too, the US tariffs – even though they have paused it for 90 days for everyone except China – is the main cause.
‘Hit a pause’
According to FX industry sources, Indian expats need to be act fast in making best use of opportunities to remit.
“It was a certainty that after RBI’s rate cut, the INR would weaken – and it did,” said an industry source. “The 23.55 levels were quire favorable in sending money home for UAE NRIs.
“The INR should remain firm all through today and then you have the weekend. Plus, next Monday too is a holiday for the Indian markets.
“So, expect the INR to remain on the higher side for the early part of next week too.”
But keep in mind that the INR remains ‘among the most stable currencies in Asia’, says Amrita Farmahan, CEO, Ambit Global Private Client. “The rupee is backed by strong dollar reserves – in excess of $650 billion…”
