The Indian rupee is predicted to plunge to 76 against the US dollar in near-term basis, weighed down by firming up of the dollar index and rising crude prices internationally, currency experts said. The weakening trend of rupee is expected to lead to a surge in non-resident Indian (NRI) remittances to the South Asian country,
The Indian rupee is predicted to plunge to 76 against the US dollar in near-term basis, weighed down by firming up of the dollar index and rising crude prices internationally, currency experts said.
The weakening trend of rupee is expected to lead to a surge in non-resident Indian (NRI) remittances to the South Asian country, as expats can earn more bucks for each dollar remitted.
Expat Indians based in the Gulf region accounts for a larger chunk of NRI remittances India, which received over $83 billion in remittances in 2020, according to a World Bank report.
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The rupee tumbled 54 paise to close at INR74.98 against the US dollar on Wednesday, one of the steepest declines posted in recent weeks.
Though the Indian currency was trading at INR74.91 against the greenback in morning trading hours on Thursday, a shade above the Wednesday’s closing level, currency experts and institutional investors strongly point to further decline in the exchange rate of rupee in the coming days.
“We see the rupee plunging to INR75.80 or above on a near-term basis, under pressure from the continued strengthening of the dollar index and the rising crude prices internationally,” Ajay Kedia, managing director of Kedia Commtrade and Research, told Arabian Business.
“Concerns on rising inflation in India, especially the food inflation, will be another factor which could weigh on the rupee’s outlook on a near-term basis,” Kedia said.
The dollar index, which gauges the US dollar’s strength against a basket of six currencies, is currently trading at 94.22.
Ajay Kedia, managing director of Kedia Commtrade and Research.
Brent crude prices continued to hold above $80 per barrel, after hitting a seven-year high of $83.13 early this week, influenced by the move of the OPEC plus group of producers to stick to its planned output increase, rather than raising it further.
“The rupee is expected to depreciate further as a stronger dollar amid tapering fears from the US Fed may put more pressure on the rupee, going forward,” ICICI Direct, an institutional retail trading and investment service, said in a note.
Currency market players said rupee will be continued to be under pressure as risk aversion in global markets and the high crude oil price adding to inflation concerns.
“The dollar-rupee exchange rate surged above INR75 tracking strong greenback on the back of rise in US treasury yields amid multi-year surge in oil price,” Himanshu Gupta, vice-president, Globe Capital Market, told Arabian Business.
“We are expecting dollar-rupee to trade in the INR74.90 to 75.30/$1 range in the near-term basis” Gupta added.
Himanshu Gupta, vice-president, Globe Capital Market.
According to banking circles, NRI remittances, especially from the Gulf countries, see a surge whenever the rupee enters a weak phase.
The impact of rising dollar index also reflected in the Indian stock market, with foreign institutional investors (FIIs) turning net sellers early this week.
FIIs offloaded shares worth $256 million in the India capital market on Tuesday, according to stock exchange data.