The Indian rupee tumbled to an all-time low against the US dollar yesterday, fuelling the concerns surrounding India's faltering economy.
The rupee fell to 58 to the dollar in trading yesterday, beyond the last record of 57.37 touched in June last year.
"The main reason causing the rupee to fall is the immense strength of the dollar index," said Adeeb Ahamed, the chief executive of Lulu International Exchange.
India is grappling with slower economic growth, high inflation, and gaping trade and fiscal deficits. The country is heavily reliant on imports, particularly of oil and gold, so a decline in the value of the rupee makes these purchases more costly.
"A country with high exports will be happier with a depreciating currency," said Mr Ahamed. "India, on the other hand, does not enjoy this luxury, mainly because of increasing demand for oil, which constitutes a major portion of its import basket."
The softness of the currency is however cheered by Indian expatriates in the UAE. The dirham is pegged to the dollar, which means that Indians sending currency home receive more rupees for each dirham.
"It brings a smile to all the Indian expatriates," said Mr Ahamed.
Yesterday the dirham was fetching 15.8 rupees.
P Chidambaram, India's finance minister, last week said that the decline in the Indian rupee was not a matter of concern because capital inflows were strong. "I think the rupee will stabilise and find its correct level," he said, speaking at the Indian Banks' Association annual meeting in Mumbai.
"The weakness right now is not related to domestic factors in India," said Naveen Mathur, the associate director, commodities and currencies, at Angel Broking. "If you see the capital markets have done pretty well in the last one to two months. When the money flows into the capital markets, the rupee should appreciate.
But the rupee is actually not appreciating because of the strength of the dollar index. Nothing new has happened [in India] - things are kind of stable, so domestic factors politically are not leading the rupee weakness in the current space."
As well as putting pressure on imports, the currency's fall comes at a time when India is trying to attract more foreign investment and its weakness hurts this cause, Mr Mathur added.
business@thenational.ae
Essentials
The flights
Emirates flies direct from Dubai to Seattle from Dh6,755 return in economy and Dh24,775 in business class.
The cruise
UnCruise Adventures offers a variety of small-ship cruises in Alaska and around the world. A 14-day Alaska’s Inside Passage and San Juans Cruise from Seattle to Juneau or reverse costs from $4,695 (Dh17,246), including accommodation, food and most activities. Trips in 2019 start in April and run until September.
Petrarch: Everywhere a Wanderer
Christopher Celenza,
Reaktion Books
UAE currency: the story behind the money in your pockets
Company%20Profile
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Women’s World T20, Asia Qualifier
UAE results
Beat China by 16 runs
Lost to Thailand by 10 wickets
Beat Nepal by five runs
Beat Hong Kong by eight wickets
Beat Malaysia by 34 runs
Standings (P, W, l, NR, points)
1. Thailand 5 4 0 1 9
2. UAE 5 4 1 0 8
3. Nepal 5 2 1 2 6
4. Hong Kong 5 2 2 1 5
5. Malaysia 5 1 4 0 2
6. China 5 0 5 0 0
Final
Thailand v UAE, Monday, 7am
Why it pays to compare
A comparison of sending Dh20,000 from the UAE using two different routes at the same time - the first direct from a UAE bank to a bank in Germany, and the second from the same UAE bank via an online platform to Germany - found key differences in cost and speed. The transfers were both initiated on January 30.
Route 1: bank transfer
The UAE bank charged Dh152.25 for the Dh20,000 transfer. On top of that, their exchange rate margin added a difference of around Dh415, compared with the mid-market rate.
Total cost: Dh567.25 - around 2.9 per cent of the total amount
Total received: €4,670.30
Route 2: online platform
The UAE bank’s charge for sending Dh20,000 to a UK dirham-denominated account was Dh2.10. The exchange rate margin cost was Dh60, plus a Dh12 fee.
Total cost: Dh74.10, around 0.4 per cent of the transaction
Total received: €4,756
The UAE bank transfer was far quicker – around two to three working days, while the online platform took around four to five days, but was considerably cheaper. In the online platform transfer, the funds were also exposed to currency risk during the period it took for them to arrive.
Info
What: 11th edition of the Mubadala World Tennis Championship
When: December 27-29, 2018
Confirmed: men: Novak Djokovic, Rafael Nadal, Kevin Anderson, Dominic Thiem, Hyeon Chung, Karen Khachanov; women: Venus Williams
Tickets: www.ticketmaster.ae, Virgin megastores or call 800 86 823
Jawan
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