Indian rupee slides to new low; remittances spike in UAE

The Indian rupee on Monday slumped to new low of 19.39 against the UAE dirham in line with the decline in currencies of emerging economies. Analysts expect the rupee's free fall to continue in the coming days.

Rajiv Raipancholia, CEO, Orient Exchange, said the rupee's free fall is due to more dollar flowing into India as exports become cheaper due to the rupee depreciation.

He predicted that the rupee hitting 19.65 against the dirham is quite possible in the next 10 days.

The Indian currency fell to 19.22 last Wednesday and Khaleej Times had reported that the rupee would slide below 19.33 in the next few days. Currencies across emerging markets have been lately subdued due to global trade war concerns and higher oil prices.

"More dollar is being remitted to India due to growing exports. Plus, the Reserve Bank of India is also not intervening and want the rupee's free flow. Hence, the rupee hitting 19.65 is quite possible next week or in 10 days," said Raipancholia.

"At the moment, the Reserve Bank of India will not intervene because India needs dollars and exports from India is improving," he said, adding that more customers in the UAE are remitting now. "There has been a 15 to 20 per cent spike in remittances from the UAE over the last three months," he added.

However, Raipancholia said rupee depreciation is fuelling inflation in the country.