Currently the rupee is at a record low of nearly 77 to the dollar. The recent start of the Russia-Ukraine war is a critical factor in this drop. Many have been wondering when the best time to remit money to India is, as the rupee slide could make a significant difference. In this article we explain the various factors affecting rupee fall and when to remit.
Effects of the Russia-Ukraine war on the Rupee
As of date one dollar is 76.6 rupees and a dirham is 20.85 rupees. The recent break out of the Russia – Ukraine war has caused the rupee to fall against the U.S. dollar and the UAE dirham as well. Crude oil, steel, cement and wheat are some of the many commodities that have risen steeply in price due to the lack of certainty of supply, due to the war. Russia and Ukraine produces a significant percentage of the world’s resources such as energy and wheat.
Dollar to INR
Before the war, on February 15th, 2022 the rupee was 75.20 to the dollar. Today it is 76.38 to the dollar. The forecasted value is 78.12 to the dollar. As of May 16th, 2022, the rupee is 77.65 to the dollar.
Dirham to INR
On Feb 15th before the war, the rupee was 20.46 to the dirham. It is currently 20.91 to the dirham. It is predicted to be 21.34 to the dirham soon. As of May 16th, 2022, the rupee is 21.14 to the dollar.
Future of Indian Rupee
The rupee has never fallen to this record low before. The consequences of this drop are mostly negative for the country. In terms of remittances however, the rupee value of the foreign remittance increases. For instance 100 dollars would be nearly 7700 rupees, instead of around 7500 just a few weeks ago. The rupee is predicted to slide down to 78.12 to the dollar and 21.34 to the dirham. On May 12th, 2022, the rupee hit a record low of 77.59 to the dollar. As of May 16th, 2022, it is 77.65 to the dollar.
Right Time to Remit ?
Today one dirham is nearly 21 rupees. It was 20.44 rupees before the war began. The rupee is predicted to fall to 21.34 by next week. Indian expats in the UAE are speculating whether to remit money back home now or to wait till the rupee drops further. Any further fall than 21.34 will possibly bring out an intervention by the Reserve Bank of India.
Indian expats in the UAE can send some amount at this time and continue to do so till the predicted low is achieved. Waiting longer than that is not advised. Indian Expats in other countries can also follow these guidelines.
As of 16th, May 2022, we reiterate, that it is a good time to remit money.
Reasons for Rupee Drop
- Prices are rising due to shortage of commodities due to war
- Our exports are reduced due to decrease in demand
- The pressure on the current account balance (CAB ) is high and the deficit is building up
- Foreign exchange inflows in equity are also not coming in because people prefer to invest in safer assets such as gold and U.S. government bonds.
Negative Consequences of Rupee Drop
- Prices are increasing
- Great strain on the Indian economy and people.
Silver Lining
One of the only advantages in today’s precarious economic situation are remittances.
How and Why the RBI will Intervene
If the rupee falls beyond a certain level, the RBI will intervene in order to keep the rupee afloat. We have a large foreign exchange reserve which can be used to relax the pressures. Hopefully the international tensions and conflicts will also abate. OPEC has just decreased the price of crude oil. The understanding is that the rupee will not constantly slide. Remittances should be planned soon. The coming week is ideal. If the rupee stays low, keep on remitting. Bear in mind that the rupee will not slide forever.
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FAQs
The rupee is at a record low. It may fall to 78 to the dollar soon. It will not fall much lower than that. The ideal time to remit is now and the following weeks.
This means that there are more rupees to the dollar. This means that the rupee is becoming less valuable.
The rupee is predicted to slide down to 78.12 to the dollar and 21.34 to the dirham. Any further fall than this is likely to be stopped by the RBI.
Is it a good time to remit ?
Yes as the rupee is at a record low, it is currently a good time to remit.
