• Loading...
  • Loading...

Indian Rupee Up Against UAE Dirham, Marks Two-Week High

Indian rupee rises against UAE dirham
Share it:

The Indian rupee rose to its strongest level in over two weeks on November 25, boosted by gains in regional peers and likely dollar inflows on account of the rebalancing of MSCI’s equity indexes. It is headed for its biggest gain since June, following a rally in domestic stocks after Prime Minister Modi’s alliance won a major election in Maharashtra, signaling continued policies in a state home to many of India’s wealthiest individuals and major investments.

Indian Rupee rises against UAE Dirham

As of today, reports suggest that the price of AED1 is closer to Rs 22.93. Arun Leslie John, Chief Market Analyst, Century Financial, explained, “The rupee was at 84.25 (22.94 UAE dirham) as of 3.23 pm IST, on November 25, its highest since Nov. 7, up 0.21 percent from its close at 84.44 (23 UAE dirham) in the previous session. While the local unit had declined to its all-time low of 84.5075 (23.02 UAE dirham) on Friday, prompting intervention by the Reserve Bank of India (RBI), a pullback in the dollar index and US bond yields offered some respite on Monday alongside dollar inflows.”

However, continuous foreign outflows coupled with the overall strength of the US Dollar and elevated crude oil prices, which surged 5% last week, are likely to strain India’s trade balance, creating challenges for sustained rupee appreciation.

According to exchange data, Foreign Institutional Investors (FIIs) remained net sellers in the capital markets as they offloaded shares worth Rs 1,278.37 crore. Besides, India’s foreign exchange reserves fell to a four-month low of 657.892 billion US dollars during the week ended November 15, marking the sharpest weekly fall on record.

Nevertheless, the RBI is still expected to remain watchful and, with its active intervention, is expected to keep a tight grip, tolerating a rather gradual depreciation to maintain relative export price competitiveness amid rising NEER valuations and particularly growing pressure from a weaker CNY. The USD-INR pair is anticipated to trade within a range in the near term, with immediate support near $84.10 followed by strong support at 83.75.