Indian rupee plunges to 13.70 against the dirham

The Indian rupee declined to 13.70 on Friday (October 21) at around 12.20pm UAE time – marking fresh 30-month lows as the US dollar, to which the UAE dirham has a straight peg, continued to appreciate against a basket of global currencies.

The dirham gained for the second consecutive session and is trading at 13.59 against the dirham at 5.45pm UAE time  after touching an intraday high of INR13.69 – its highest level since April 28, 2009 – and up from INR13.56 late Thursday.

Experts maintain that the Indian currency declined today on investor risk- aversion ahead of two critical meetings of EU leaders and because India’s major importers were seen buying the dollar to cover their liabilities.

The dollar index surged to 77.21 earlier today and is currently hovering at 76.35. The rupee has declined almost 12 per cent against the dollar year-to- date, with expatriates in the UAE and rest of the Gulf countries – whose currencies are pegged to the US dollar – cheering at every little dip that the rupee witnesses as it leads to welcome monthly savings by expats.

With most investors scampering for the safety of the US dollar, risk-appetite for emerging markets currencies remains weak, and experts believe that capital flows to India will remain under pressure during the current quarter. 

Consensus among analysts is that the rupee is likely to witness a low of 13.75 against the UAE dirham (50.50 against the US dollar) in the coming few sessions.