New Delhi: Due to rising prices of crude oil and other commodities triggered by the Russia-Ukraine war, Indian rupee has fallen against UAE dirham.
As currently, India’s exchange rate against dirham is Rs. 20.91, Indian expats in the UAE are confused between two choices, remit money back home now or wait for further drop.
It is expected that the rupee will further fall down to Rs. 21.34 by next week. However, analysts also mentioned that any further drop in Indian rupees against other currencies may trigger in RBI’s intervention.
Although, the exchange rate of Indian currency is detained by market, there is a provision for timely intervention by the central bank in case of volatility.
Why Rupee hits record low at 77 to dollar?
The Ukraine crisis pushed Brent crude oil price to $130 a barrel on Monday. Besides, the trend is expected to trigger an inflationary trend and ultimately a reversal in monetary policy. Further, it has accelerated FIIs’ selling in the Indian equity market.
All these are the reasons for the rupee to hit record low at 77 to dollar.
IIFL Securities VP, Research, Anuj Gupta said: “Higher inflation, rising crude oil and commodity prices along with outflow of FIIs from the equity market are the major reasons for rupee depreciation. We expect it to test 77.50 to 78 levels.”
Why crude oil price rising? Why it is bad for India?
After Russia’s invasion of Ukraine, many countries have started imposing sanction against Russia which is one of the largest exporter of crude and also member of OPEC+.
Due to sanctions, the supply of crude oil in the market has drop without any change in the demand. It has lead to supply-demand mismatch thereby resulting in rise in crude oil prices.
Although, it is good for oil exporting countries, it is a bad news for oil importing countries likely India.