Tuesday, Sep 13, 2011
Gulf News
Abu Dhabi The flow of money transfers from the UAE to India is set to increase at a fast clip following the Indian rupee’s continued depreciation against the dollar and the dirham, which is pegged to the dollar, say experts.
Yesterday, Dh1 was fetching Rs12.84 in the currency market, a level not seen in more than a year.
A dollar is worth Dh3.678. If the global financial scene deteriorates further, the dirham may soon fetch Rs13 or more.
“A reduction in dollar inflows and an increase in dollar outflows lead to the rupee’s depreciation. If the negative news from the international markets, particularly from Europe continues, it may lead to a situation where foreign funds sell more stocks in India, exporters stop selling dollars and importers buy even more dollars, leading to even higher dollar demand,” Ashok Gupta, chief executive for Bank of Baroda’s GCC operations, told Gulf News.
Rupee-dollar rate
“In the near-term, the rupee may touch 48 to the dollar,” he added.
Sudhir Shetty, chief operating officer for UAE Exchange, said the rupee may soon test 47.50 to the dollar.
“The dollar index is rising, the importers are going for cover, the foreign institutional investors are taking their money out of the stock market and the Reserve Bank of India has stayed away from managing the slide in the rupee,” he said.
“If the 47.5 level is breached, the rupee may go towards 49 to the dollar.
“However, I expect the Reserve Bank of India to intervene in the currency market soon after the rupee goes past 47.5 to the dollar,” said Shetty.
He said in the course of the last three trading days the rupee has plummeted against the dirham, which has led to an upsurge in currency remittances from the UAE to India.
By Himendra Mohan Kumar?Staff Reporter
Gulf News 2011. All rights reserved.
