Indian rupee to get stronger, NRIs should remit now

Dubai - The rupee has been one of the best-performing emerging market currencies this year.

If you're a non-resident Indian (NRI) and looking to remit a handsome amount back home or planning to buy a property or invest in any venture, the time is now.

Going by views of analysts and industry executives, the Indian currency is likely to strengthen further against the US dollar -- thereby against the UAE dirham, because the Emirati currency is pegged to the greenback -- in the wake of Reserve Bank of India's (RBI) decision to cut interest rates last week, and may strengthen as much as 1.1 per cent.

"Rupee has firmed up a bit more than we had expected it to. There hasn't been radical movement, and we feel that it might not breach 63.30 against the dollar for the time being. However, we can expect the Indian currency to hit 64.30 against the dollar in the month of August, as stocks across the globe are getting set to adjust with the third quarter earnings. In Indian markets, too, half yearly results are key to determine the trend of large cap and mid cap giants," commented Adeeb Ahamed, CEO of LuLu Exchange.

The rupee has already been one of best performing emerging market currencies this year as it has hitherto increased by nearly 7 per cent, thanks to inflows for foreign funds into the Indian equities.

The rupee was trading at 63.609 against the dollar and 17.311 against the dirham on Sunday afternoon. It hit a high of 63.58 last week against the US dollar, its highest level since July 2015.

The Indian central bank last week reduced the repo rate after a gap of almost 10 months by 0.25 percentage points to six per cent.

Aditya Pugalia, an analyst with Emirates NBD Research, agrees with Ahamed. "With the economy continuing to make progress and the RBI shifting gears to boost economic growth, we expect the Indian rupee to continue to strengthen, albeit at a slower pace," he noted.

The rupee, according to Pugalia, is among the best performing emerging market currencies in 2017 having rallied 6.8 per cent year-to-date. While the broad US dollar weakness has helped, the primary driver has been inflows from foreign institutional investors into Indian equities. In the first seven months of 2017, foreign institutional investors have bought stocks worth $8.9 billion.

Promoth Manghat, CEO, UAE Exchange, echoes Manghat and Ahamed, saying rupee could climb further in the near-term as the RBI's interest rate cut lures more inflows into local market.

"The break in USD/INR below 64 means the RBI will not hinder the inflows, leading to further near-term rupee appreciation. Asia's third-largest economy has borrowing costs placed at the lowest since 2010, spurring growth and earnings along with encouraging foreign investments of about $8.8 billion in local stock this year. Economic and political stability along with reform momentum attract inflows, which will further appreciate the rupee. The rupee reached a two-year high after the RBI's decision on Wednesday. Meanwhile analysts are predicting INR to be range bound at 61-65 range per dollar by March next year."

Don't hold back