Indian rupee free-fall to continue

Dubai - On Monday, the rupee closed at 67.93 versus a dollar while its exchange rate jumped from Rs17.96 on January 1 to Rs18.49 against the UAE dirham. The rupee opened this year at 66.17 against the greenback.

The free-fall of the Indian rupee against the US dollar is expected to continue for a couple of months for numerous reasons, according to an industry specialist.
On Monday, the rupee closed at 67.93 versus a dollar while its exchange rate jumped from Rs17.96 on January 1 to Rs18.49 against the UAE dirham. The rupee opened this year at 66.17 against the greenback.
A weaker rupee will boost remittances in rupee terms from the UAE and other Gulf countries and at the same it will also help Indian exporters to remain competitive in international market where the greenback is strong against all currencies, UAE Exchange president Y. Sudhir Kumar Shetty told Khaleej Times on Monday.
The global economic scenario is not good as large economies in Europe are not doing well in addition to China problem, Shetty said, adding that there is no point for a stronger Indian currency when other currencies are weak.
He pointed out that it's ideal if the rupee will remain weak, so Indian exporters will become competitive with other exporters in the international market.
Talking about the reason of the weaker rupee, Shetty explained that dollar strength is one of the causes of the rupee being very weak.
Another reason is stock markets in India are going lower and lower so foreign investors have taken their money out of India resulting in strong demand for dollar, he added.
Indian stock markets closed lower on Monday. The Sensex closed at 24,287 losing 330 points and the Nifty closed at 7,387 losing 102 points.
There is no other indicator slowing positive image of rupee, he said, adding: "None of the factors are helping the rupee to strengthen. It's a fact that historically, the rupee gets weaker on average five per cent per annum. The trend will continue but it could be four per cent or three per cent."
"The rupee will remain under pressure from six months to one year," he opined. If the economy is doing well then stock markets will bring greenbacks back to the country, he hoped.
 abdulbasit@khaleejtimes.com 
 

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