How will Indian rupee perform against UAE dirham in 2022?

Rupee seen trading between 20 and 21 versus dirham this year

PTI file
PTI file

A Staff Reporter

Published: Tue 1 Mar 2022, 10:12 AM

The Indian rupee is expected to trade in the range of 20 and 21 against the UAE dirham in the first half of this year, says Hasan Fardan, chief executive officer of Al Fardan Exchange.

The rupee was trading at 20.5 against the Emirati dirham or 75.3 versus the US dollar on Tuesday. The Indian markets were closed on March 1 on account of Mahashivratri.

Fardan also expects remittances from UAE to the Indian corridor will increase by around 20 per cent this year.

“The Indian rupee is expected to trade in the range of 73.50 -77.00 against dollar and 20.01 to 20.96 versus dirham in the first half of 2022. India has the fourth-largest forex reserve of around $635 billion. With the global economies slowly coming back to normalcy, exports are expected to increase trade deficits resulting from the reduction of imports,” added Fardan.

He pointed out that one major concern for emerging markets, including the rupee depreciation, is the expected interest rate hikes by the US Federal Reserve this year. “If the interest rates are increased more than thrice by Fed, funds can flow back to the US stocks from the Indian markets.”

He said many other factors will influence the rupee in the coming months including crude prices, FDI flows, policy decisions by the Indian and global central banks, the Covid-19 pandemic and state election results.

In 2022, he said there has been an overall natural downtrend in the Indian remittance flow as the rupee gets stronger compared to last year. “We expect a 20 per cent growth in the Indian corridor in the year 2022, as we bounce back and see a net positive migration into the UAE.”

According to World Bank data, India, the world's largest recipient of remittances, received $87 billion in 2021 with the US being the biggest source, accounting for over 20 per cent of these funds.

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