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Indian Budget Euphoria Spoils UAE Expat Remitters’ Party As Rupee Rallies
UAE Dirham to INR Rates

Indian Budget Euphoria Spoils UAE Expat Remitters’ Party As Rupee Rallies

UAE Dirham to Indian Rupees

Proverbial tide in sentiment towards Indian rupee seems to be turning

Indian Finance Minister Arun Jaitley presented a balanced budget on Monday, February 29, 2016, and the rupee has been on steroids ever since. The rupee continued its unabashed rise over all six sessions since the country's Budget 2016 was presented on the last day of February, staging a euphoric comeback to mark the currency's biggest weekly gains since September 2013. Several expats who were waiting for their February salaries to remit at the ‘best ever’ exchange rate were disappointed as the rupee began an incredible rally just before they could actually remit. The proverbial tide in the sentiment towards India as an investment destination and the Indian rupee seems to be turning for the better, with the rupee and equities emerging as the biggest beneficiaries of the post-budget week (see chart below).

The rupee rose 2.9 per cent in a week, from near an all-time low of Rs68.899 vs $1 [Rs18.758 vs Dh1] on Thursday, February 25, 2016, to Rs66.885 vs $1 [Rs18.209 vs Dh1] on Friday, March 4, 2016. The benchmark Bombay Stock Exchange Sensitivity Index (BSE Sensex) was trading at 22,778 points when Jaitley was about half-an-hour into his 90-minute budget speech. The BSE Sensex index closed the week at 24,646 points, up 1,868 points – or 8.2 per cent – in five days. That’s the best post-budget week that the index has seen in a decade.”

The week gone by saw the rupee appreciate the most since it rose more than 7 per cent in the eight days between September 3 – 11, 2013, the week India’s rockstar central bank governor Raghuram Govind Rajan took the helm at Reserve Bank of India (RBI). Euphoria surrounding Rajan’s RBI takeover was in anticipation of the end of India’s ‘policy paralysis’ – a phrase that described the government’s inaction on various matters during Manmohan Singh’s second five-year term as Prime Minister. This time, though, it is in response to the measures announced in the budget. Jaitley announced increased spending on rural jobs programme, set aside money for higher government salaries and pensions, and announced a new health insurance plan.

He also reiterated of the Indian government’s seriousness about reigning in the country’s fiscal deficit to a nine-year-low of 3.5 per cent of GDP in the forthcoming fiscal year. These, along with other measures he announced, did the trick and encouraged foreign investors to make a euphoric comeback into Indian equities, pushing the currency higher. And while the rupee’s gain is expats’ loss (because they will have to spend more in the currency they earn to remit the same amount of rupees), not many are complaining. Even after the recent gains, the rupee is only at a two-and-a-half-month high, and is trading at mid-January, 2016, levels. Over the last one year, though, the rupee is still down more than 8 per cent over the highs achieved in early April 2015.


Courtesy: Gulf Jobs