Indian expats can’t believe their eyes as rupee crashes through Rs16.30 vs. Dh1

The Indian rupee has fallen sharply this morning, falling through several resistance levels within the span of a few minutes this morning as the market opened up for early trade, and crashed through Rs16.30 against the UAE dirham at 7.50am UAE time, making a third record low in three days.

The rupee is now down almost 16 per cent in less than nine months since October last year, when it was trading at Rs14.08 to one dirham, and UAE expats remitting money home today will be getting the best ever exchange rate they've experienced.

The rupee remained under pressure throughout the session on Thursday, and was trading at Rs16.32 against the UAE dirham at 2.30pm UAE time (10am GMT). 

In a decline that has left Indian expatriates in the country pleasantly surprised, the rupee came very close to breaching the Rs60-level against the US dollar this afternoon (Rs59.95 at 2.30pm UAE time).

The plinge comes in the session right after US Federal Reserve chairman Ben Bernanke upgraded the Fed’s assessment of the US economy, which will imply a tapering off of America’s multi-billion-dollar quantitative easing program sooner than later.

The third tranche of the program, commonly known as QE3, pumps up the world’s economy with up to $85 billion in freshly printed money, something that has been buoying up asset prices as well as share valuations in emerging markets.

When (not if) the incessant flow of this unlimited money via QE3 recedes, there will be serious implications for emerging market economies, and with the Indian economy’s fundamental weaknesses rearing their head, the future of the rupee looks even bleaker.

This morning (Thursday), the rupee dipped to a record Rs16.30 against the UAE dirham (Rs59.89 against the US dollar) within minutes of trade opening. It had been at static at Rs15.98 against Dh1 in late Asian trade on Wednesday.

Traders now suspect that the Reserve Bank of India (RBI) will pump in some of its reserves of the Us dollar to shore up the beleaguered currency and defend the Rs60-level against the dollar, but maintain that if the current rout gains momentum, it will be a tough task for the RBI to save the rupee from a further slump today.

Meanwhile, among the other expat currencies that have been hit by the recent dollar strength are the Pakistani rupee (hit an all-time low of PKR26.91 vs. Dh1 at 1.40pm UAE time today), the Philippines peso (which is at a one-year low of PHP11.94 vs Dh1) and the Nepalese rupee (all-time low this morning of NPR26.06 vs. Dh1).

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